The economic significance of “insignificant” rules
Version of Record online: 24 MAY 2007
2007 Blackwell Publishing Asia Pty Ltd
Regulation & Governance
Volume 1, Issue 2, pages 172–182, June 2007
How to Cite
Hahn, R. and Cecot, C. (2007), The economic significance of “insignificant” rules. Regulation & Governance, 1: 172–182. doi: 10.1111/j.1748-5991.2007.00011.x
- Issue online: 24 MAY 2007
- Version of Record online: 24 MAY 2007
- Accepted for publication 6 March 2007.
- benefit-cost analysis;
- environmental economics;
- risk analysis
We know relatively little about the economic effects of “insignificant” rules because they are not typically analyzed. Yet, these rules could be cumulatively important. We provide an economic analysis of one proposed rule to control hazardous air pollutants, which is not considered to be economically significant. This rule is of particular interest because it is one of the first in a long series of rules that Environmental Protection Agency (EPA) will consider for limiting hazardous air pollutant emissions. Our analysis suggests that the proposed controls that EPA has considered are not likely to pass a benefit–cost test. We recommend that an agency base its decision to allocate additional resources to benefit–cost analysis on the expected value of the improved information. In addition, agencies should consider applying a rule of thumb that would specify a threshold level of risk reduction that needs to be achieved before some kinds of regulation are considered.