Another update to "Cost-Benefit Analysis at the Crossroads" symposium (LPE Project)

Lpe projectBy Mark D. White

Talk about the gift that keeps giving: The "Cost-Benefit Analysis at the Crossroads" symposium at the LPE Project has posted several new entries which collectively focus and intensify the critical look at CBA in the earlier contributions. In this post, I'll look at three that highlight the failures of inclusivity at the heart of CBA.

In "Modernizing Regulatory Review Beyond Cost-Benefit Analysis," Melissa Luttrell (University of Tulsa College of Law) and Jorge Roman-Romero (Equal Justice Works) write that:

Cost-benefit analysis (CBA) is inherently classist, racist, and ableist. Since these are foundational problems with CBA, and are not simply issues with its implementation, they can never be fixed by mere methodological improvements. Instead, the ongoing modernization of centralized regulatory analyses must focus on “moving beyond” CBA, and not on fixing it or improving it.

In response, they suggest a more comprehensive and holistic approach to regulatory review that incorporates values outside of CBA, partly by inviting the input of experts other than economists:

A comprehensive and just approach to regulation that properly balances economic considerations with deontological factors is possible in a post-CBA world. In the context of risk regulation, the regulatory review process should prioritize deontological interests, particularly when controlling statutes don’t provide for a welfarist blueprint, and are, instead, more concerned with protecting rights or promoting equity—as most of them are.

Implementing this post CBA-approach to regulation requires OIRA to diversify its portfolio of career staffers beyond economists, thus avoiding falling into methodological labyrinths that threaten to derail regulatory action with no apparent coherence. By incorporating more areas of disciplinary expertise in the review process, important non-quantifiable considerations like climate resilience, environmental justice, and intergenerational equity would be given predominant weight despite the difficulties associated with assigning a monetary value to the benefits that might accrue from centering them. Moreover, a post-CBA regulatory review that appreciates deontological values should be wary of falling into other reductionist utilitarian frameworks that democratically-enacted statutes do not call for. Recall that the Clinton and Obama administrations both made gestures toward retaining CBA while softening its anti-regulatory effects; these half-measures were ineffective then, as they will be again if CBA is merely “reformed” instead of rejected.

Karen Tani (University of Pennsylvania) follows in the same vein in her contribution, "The Limits of the Cost-Benefit Worldview: A Disability-Informed Perspective," which details two specific objections to CBA in this specific context. First, she highlights who has the power to make decisions and who is subject to them:

In a society that remains inaccessible to many disabled people, some have found it useful to be able to say, “this thing I want (need) is not that costly, especially relative to the benefits, so you should just give it to me.” But as disability law scholars and practitioners would be the first to admit, that same framework carries within it a concession. It suggests that at some point, or for some seekers, cost will be an entirely valid reason for the person who controls access or resources to say “no.” The benefits may be entirely real, but they will not justify the costs.

Surely there are situations in which we don’t want to make that decisional framework available—not because we think we can simply wish away costs, but because of the importance of the interest at stake and because we know just how easy it is to craft compelling narratives of austerity and costliness. To be sure, austerity/cost narratives have counter-narratives—of deservingness, of need, and even of right—but historically, some narrators have received more credence from the American public than others. There is a thumb on a scale against anyone who can plausibly be blamed for their own vulnerability (“welfare mothers” are a prominent historical example).

Second, she questions the ways that different issues are framed, either as costs or benefits:

The second point—again, heard often in the disability community—is about deep structures of exclusion and how easily they escape the notice of policymakers. CBA is particularly unhelpful in this regard. As Martha Nussbaum has argued, in the context of her capabilities work, CBA may help us in answering which of the options in front of us “contains the largest net measure of good,” but it is not an apt tool for naming and questioning the immorality that may be embedded in the set of choices made available. As Nussbaum puts it, CBA foregrounds the “obvious question” and leaves unasked and unanswered the “tragic question” that may be present in the same situation. Thus in the disability context, CBA might help us decide whether and how to make existing public transportation accessible (still a serious problem), but it does not ask why transportation systems were built in ways that excluded so many disabled people in the first place. It might help us make a decision about the pace and nature of deinstitutionalization, but it would not interrogate the morality of a society that has long separated people with intellectual and developmental disabilities from the rest of the community and confined them in warehouse-like settings. More generally, CBA is comfortable casting some people’s needs as the “costs,” and implicitly asking those people show their worth, rather than asking how and why they ended up on that side of the ledger to begin with.

Finally, in "A Post-Neoliberal Regulatory Analysis for a Post-Neoliberal World," James Goodwin (Center for Progressive Reform) echoes the comments of the previous two posts, calling out the undemocratic nature of CBA as well as its neglect of deontological values, and adds an anti-social bias (that will certainly resonate with social economists):

[T]he analysis must recognize and properly account for the complex patterns of social relationships that define and give meaning to each of our lives. Welfare economics-based cost-benefit analysis denies these linkages, viewing individuals in strictly atomistic terms and pretending our existence is little more than the single-minded pursuit of self-interested utility. An analysis lacking a richer understanding of our situated, mutual dependencies is not merely incomplete; it is systematically biased against pro-social policies, such as controls on toxic mercury pollution emissions from fossil-fueled power plants or effective COVID protections for workers in the service industry. Worse still, it rewards and reinforces the cultural disconnectedness at the root of so many of our public policy challenges.