Regulatory Moneyball, Values and Cost-Benefit Analysis

Cass Sunstein has been whetting appetites for his new book, Simpler: the Future of Government (out April 9) by doling out tasty samples of its content (see e.g. here and here). One of these is an essay for Foreign Affairs, "Regulatory Moneyball". The title is borrowed from Michael Lewis' superb Moneyball: the Art of Winning in an Unfair Game, about Billy Beane's use of statistics to get the jump on baseball clubs who relied on hunches and instinct.

Due Process and Drone Strikes

Last week, the New York Times published a lengthy article on the 'secret kill list' being maintained by President Obama. Whatever the merits of targeted killings as a matter of international law, international human rights law, or justice, for students of administrative law, there are at least three aspects of interest to the story. To be clear, in what follows, I am not taking a position on the legality or morality of the strikes. But in the absence of formal due process through judicial review, it is worth considering the internal safeguards that administrative law norms suggest.

Monetizing Benefits

Interesting paper here from Arden Rowell (University of Illinois). One of the difficulties with regulators performing cost-benefit analyses lies in determining what should go into the analysis. Some things we can count quite easily: to use Rowell's example, the cost of installing rear-view cameras on cars; and the benefits in terms of lives saved (although this exercise may be controversial). Other things are harder, if not impossible, to count: the added benefit that childrens' lives will be disproportionately saved by rear-view cameras. How then, the question goes, can you conduct a cost-benefit analysis when the costs and benefits are incommensurable? Isn't the problem, at base, that regulators must make moral judgments about the weight to accord to certain types of interest, and that moral judgments cannot be quantified? Rowell suggests that regulators should attempt to partially monetize all benefits, as best they can, to conduct thorough cost-benefit analyses in the face of worries about incommensurability:

Insofar as this hesitation stems from concern about the incommensurability of money and other goods, it should cease immediately. Incommensurability does not preclude partial valuation, i.e. the partial expression of a good’s value in terms of another good. Even something as horrific and emotionally laden as the death of a child can therefore be partially monetized, i.e. partially expressed in terms of money, so long as people are willing to pay money to prevent it from occurring. Emotional goods like these are difficult to think about, and even more difficult to monetize, but refusing to monetize them at all is not a reasonable solution.

Rowell's solution would have the advantage of forcing regulators to set out their assumptions and judgments in monetary form, so as to allow a balancing of costs and benefits. Such a balancing would then be transparent and accountability would presumably be increased. But I have a nagging feeling that to assign dollar amounts in this way may serve simply to obscure the important moral judgments that have to be made by regulators.