International Review of Environmental and Resource Economics > Vol 3 > Issue 4

An Evaluation of Government Efforts to Improve Regulatory Decision Making

Robert W. Hahn, University of Manchester, United Kingdom
Suggested Citation
Robert W. Hahn (2010), "An Evaluation of Government Efforts to Improve Regulatory Decision Making", International Review of Environmental and Resource Economics: Vol. 3: No. 4, pp 245-298.

Publication Date: 28 May 2010
© 2010 R. W. Hahn
Environmental Economics
RegulationPublic administration


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In this article:
1 Introduction 
2 The Potential for Improving Regulation 
3 How Economic Analysis can Affect Laws and Regulations 
4 President Bush's Executive Order on Regulation and Guidance, and the Obama Administration's Approach 
5 Learning from Experience 
6 Conclusions and Future Research 


In response to the increasing impact of laws and regulations, several governments have introduced economic analysis as a way of improving regulatory decision making. This paper provides the first comprehensive assessment of government-supported economic analysis of laws and regulations. It also reviews the changing role of economic analysis in regulatory decision making.

I find that there is growing interest in the use of economic tools, such as benefit–cost analysis; however, the quality of analysis in the U.S.A. and European Union frequently fails to meet widely accepted guidelines. Furthermore, the relationship between analysis and policy decisions is tenuous. To address this situation, I recommend alternative legal and institutional frameworks that could allow economics to play a more central role in regulatory decision making. In addition, I suggest that prediction markets could help improve regulatory policy.