Grading the Government

For over a decade, scathing critiques of government have been fueled by a group of studies called "regulatory scorecards," which purport to show that the costs of many government regulations vastly outweigh their benefits. One study claims that government regulations cost up to $72 billion per life saved. Another study, co-authored by Bush's regulatory "czar," John Graham, claims that over 60,000 people lose their lives each year due to irrational government regulation. A third scorecard claims that over half of all major regulations issued since 1981 fail cost-benefit tests. These widely cited studies have contributed mightily to a widespread skepticism about the ability of government to regulate rationally. This skepticism has produced, in turn: legislative requirements for more elaborate agency analyses, closer OMB oversight, congressional review of agency decisions, a stream of proposals for further "regulatory reforms" aiming at reining in government agencies, and any number of foregone measures to protect public health, safety and the environment. But what is the skepticism based on? This Article offers a comprehensive evaluation of the three most influential scorecards behind the "regulatory reform" movements. It demonstrates that all three studies rely on undisclosed data and non-replicable calculations; use biased regulatory samples; misrepresent ex ante guesses about costs and benefits as actual measurements; and grossly under-estimate the values of lives saved, or the number of lives saved, or both. They also exclude all unquantified costs and benefits, disregard all questions about the fairness of the distributions of cost and risk, and conceal the large uncertainties that are present in virtually every regulatory analysis. Close inspection reveals that Graham's sensational claim that 60,000 lives are lost each year through irrational regulation is not supported by his study's own data. This Article also shows that many, though not all, of these defects are endemic to the enterprise of compiling a strictly numerical scorecard, rendering this a defunct mode of analysis. The Article concludes with several affirmative recommendations for improving the assessment of individual rules and government regulation overall.