Cost-Benefit Analysis, Ben Franklin, and the Supreme Court

Abstract

This article looks at the ongoing debate over the use of cost-benefit analysis in agency rulemaking through a case study of a set of EPA power plant regulations that brought that debate before the U.S. Supreme Court in 2009. In the briefing before the Court, a peculiar pattern emerged: the briefs for the environmentalists opposing CBA portrayed it as highly formal, rigid, quantitative, and technical, while the industry and think-tank briefs advocating CBA painted it as informal, based in common sense, and associated with Ben Franklin. These diverging descriptions reflect the fact that cost-benefit analysis is not a monolith but comes in many varieties on a spectrum from informal to formal. Examining the rulemakings leading up to and following the Supreme Court’s opinion, this case study illustrates the importance of clearly defining the term “CBA” and the intellectual sloppiness and irrationality that can result when policymakers fail to distinguish between these very different forms of analysis.