The impact and economic merits of President Biden’s Executive Order 13985 on equity depend on how the executive order is implemented. While policy discussion to date has focused on equitable outcomes, we propose framing risk equity policies in terms of equitable risk tradeoff rates based on six policy guidelines. The starting point for ex ante evaluation of equity for mortality risk policies should be the symmetric application of the value of a statistical life (VSL) to all groups. Because of the substantial heterogeneity in VSLs by income and demographic characteristics, symmetric tradeoff rates generate subsidies and deficits relative to private values of risk. Efforts to provide for distributional preferences should be grounded in an understanding of the differentials already provided through application of a uniform VSL. Targeting government programs to specific groups ex ante should be coupled with estimates of the efficiency loss based on symmetric tradeoff rates and the implicit tradeoff rate ratio relative to the average VSL needed to support the redistributive policy. Here, we propose equity guidance that could be incorporated in a revised version of Office of Management and Budget Circular A-4. We contrast the ex ante equity guidance approach with the ex post risk equity evaluation procedure that is incorporated in the Biden Administration’s recently proposed Justice40 plan, where 40% of the benefits of existing programs must be targeted to certain minority groups without ex post examination of their cost effectiveness either feasible or currently planned.

The Biden administration has made equity a priority when issuing regulations, encouraging agencies to ensure that their regulations appropriately benefit and do not inappropriately burden disadvantaged groups. But scholarly examinations of agencies’ practices to date on understanding the distributional consequences of their regulations and on promoting equity have revealed significant gaps. In particular, agencies pay very little attention to the incidence of the costs of their regulations. The U.S. Environmental Protection Agency, for example, rarely considers the incidence of regulatory costs among disadvantaged groups, despite being an agency that conducts relatively complete benefit–cost analyses and explicitly analyzes environmental justice implications of its regulations. But this cost-blindness is a mistake; it presents a missed opportunity to use the current equity-focused momentum to make real improvements for disadvantaged groups that could have long-lasting effects. This essay calls for agencies to give more attention to the incidence of regulatory costs in order to identify needs and opportunities for grants and investments to disadvantaged groups. This approach could provide much-needed direction for a program like the Biden administration’s Justice40 initiative.

Despite repeated calls for retrospective regulatory review by every President since the 1970s, progress on implementing such reviews has been slow. We argue that part of the explanation for the slow progress to date stems from misalignment between the goals of regulatory review and the institutional framework used for the review. We define three distinct goals of regulatory review – the rule relevance goal, the rule improvement goal, and the regulatory learning goal. We then examine the text of the Presidential Executive Orders and major Congressional legislation addressing retrospective review, and document which goals were targeted and which institutions were used to conduct the reviews. We find that the U.S. federal government has almost always sought review of one rule at a time, conducted by the agency that issued or promulgated the rule and that these reviews tend to focus on rule relevance and costs. This institutional framework for retrospective review – one rule, assessed by the promulgating agency, focused on relevance and cost – is only well-suited to a narrow interpretation of the rule improvement goal. We then review alternative institutional structures that could better meet the rule improvement goal and the broader regulatory learning goal across multiple rules and agencies, and we offer recommendations for developing new guidance and institutions to promote multiagency regulatory learning.

Food and Drug Administration (FDA) published a final regulation in 2004 that requires pharmaceutical manufacturers to place linear bar codes on certain human drug and biological products. The intent was that bar codes would be part of a system where healthcare professionals would use bar code scanning equipment and software to electronically verify against a patient’s medication regimen that the correct medication is being given to the patient before it is administered, which could ultimately reduce medication errors. In the 2004 prospective regulatory impact analysis, FDA anticipated that the rule would stimulate widespread adoption of bar code medication administration technology among hospitals and other facilities, thereby generating public health benefits in the form of averted medication errors. FDA estimated that annualized net benefits would be $5.3 billion. In this retrospective analysis, we reassess the costs and benefits of the bar code rule and our original model and assumptions. Employing the most recent data available on actual adoption rates of bar code medication administration technology since 2004 and other key determinants of the costs and benefits, we examine the impacts of the bar code rule since its implementation and identify approaches to improve the accuracy of future analyses. In this retrospective study, we use alternative models of health information technology diffusion to create counterfactual scenarios against which we compare the benefits and costs of the bar code rule. The magnitudes of the costs and benefits of the 2004 rule are sensitive to assumptions about the counterfactual technology adoption rate, with the upper-bound range of calculated annualized net benefits between $2.7 billion and $6.6 billion depending on the baseline scenario considered.

Disclaimer: The findings, interpretations, and conclusions expressed in this article are those of the authors in their private capacities, and they do not represent the views of the Food and Drug Administration.

Executive Order (EO) 13771 on “Reducing Regulation and Controlling Regulatory Costs” introduces a new regulatory budgeting system in the U.S. federal rulemaking process. International experience suggests that the new rule, aimed both at reducing the number of regulations and the volume of regulatory costs, will focus on a subset of regulatory impacts, most certainly the direct costs imposed by regulation on businesses, or even a subset thereof. The paper discusses possible ways to make sense of the new rule, without undermining the soundness of benefit-cost analysis mandated by EO12866. The paper concludes that the new system, while potentially promoting more retrospective regulatory reviews, will risk fundamentally affecting the quality of regulation in the United States, generating frictions and inefficiencies throughout the administration, to the detriment of social welfare.

Regulatory impact analyses (RIAs) weigh the benefits of regulations against the burdens they impose and are invaluable tools for informing decision makers. We offer 10 tips for nonspecialist policymakers and interested stakeholders who will be reading RIAs as consumers.

1. 1. Core problem: Determine whether the RIA identifies the core problem (compelling public need) the regulation is intended to address.

2. 2. Alternatives: Look for an objective, policy-neutral evaluation of the relative merits of reasonable alternatives.

3. 3. Baseline: Check whether the RIA presents a reasonable “counterfactual” against which benefits and costs are measured.

4. 4. Increments: Evaluate whether totals and averages obscure relevant distinctions and trade-offs.

5. 5. Uncertainty: Recognize that all estimates involve uncertainty, and ask what effect key assumptions, data, and models have on those estimates.

6. 6. Transparency: Look for transparency and objectivity of analytical inputs.

7. 7. Benefits: Examine how projected benefits relate to stated objectives.

8. 8. Costs: Understand what costs are included.

9. 9. Distribution: Consider how benefits and costs are distributed.

10. 10. Symmetrical treatment: Ensure that benefits and costs are presented symmetrically.

Numerous regulatory reform proposals would require federal agencies to conduct more thorough economic analysis of proposed regulations or expand the resources and influence of the Office of Information and Regulatory Affairs (OIRA), which currently reviews executive branch regulations. Such reforms are intended to improve the quality of economic analysis agencies produce when they issue major regulations. We employ newly gathered data on variation in current administrative procedures to assess the likely effects of proposed regulatory process reforms on the quality of agencies’ regulatory impact analyses (RIAs). Our results suggest that greater use of advance notices of proposed rulemakings for major regulations, advance consultation with regulated entities, use of advisory committees, and expansion of OIRA’s resources and role would improve the quality of RIAs. They also suggest pre-proposal public meetings with stakeholders are associated with lower quality analysis.