BY STEPHANIE YOUNG
Widespread public participation and administrative cost-benefit analysis are not always considered to be compatible concepts. But on March 1, when Cass Sunstein ’78 spoke on “Humanizing Cost-Benefit Analysis” to a room packed with students, professors, and community members, he demonstrated a commitment to linking these two ideas.
Dean Martha Minow introduced Sunstein, Harvard Law School professor and Administrator of the Office of Information and Regulatory Affairs, as the head of “the single most powerful office most people have never heard of.” Sunstein spoke broadly about his goals for OIRA and President Barack Obama ’91’s vision for changes within the agency.
Cost-benefit analysis has a reputation as a cold and mechanical test, but Sunstein believes it is an important tool for dividing resources while extending and improving people’s lives through regulation. “Humanizing” cost benefit analysis, he said, takes place along three directions: examining actual human behavior and not the decisions of a theoretical “rational actor;” gathering accurate data that reach beyond monetary measures; and democratizing data by tapping “the dispersed knowledge of the American people.”
OIRA’s authority comes from the Paperwork Reduction Act of 1980, and its main function is to review the actions of all other federal regulatory agencies. Sunstein described the agency’s functions as a mixture of facilitating collaboration between and across agencies, ensuring an open process, and analyzing the impact of potential regulations. He provided examples of OIRA’s successes in collaborating with various agencies, including simplifying the Federal Application for Student Aid, working to harmonize international occupational safety and health warning systems, and focusing on distracted driving.
Sunstein mentioned the role of cognitive biases in human behavior, and the importance of considering these idiosyncrasies when conducting cost-benefit analysis. Rather than conducting cost-benefit analysis based on “Homo economicus,” Sunstein argued that research should include phenomena such as “information cascades,” such as music downloads with popularity ratings, in which statistics about others’ decisions become criteria for an individual’s decision-making process.
With a nod to social networking, Sunstein described the vast knowledge of the American public, the value of transparent government, and the importance of public participation. In the spirit of civic engagement and democracy, the Obama administration has prioritized a policy of encouraging openness and public participation, called the Open Government Initiative. The traditional notice and comment style of rulemaking can expand through the use of Internet tools, and OIRA is coordinating multiple agencies’ efforts to put more and more of their activities online. Each agency is in the process of creating a new website with the suffix “/open” attached to its web address. These sites are intended to provide information about current agency initiatives in a clear public format. OIRA also has a “dashboard” website, www.reginfo.gov, with aggregate data about agency activities.
Sunstein also expressed a deep personal excitement about his position with OIRA, mentioning that he named his current position as his dream job during one of his first dates with his now-wife, Samantha Power ’99.
Sunstein’s humanized cost benefit analysis still includes the cost element, but tries to find accuracy through a new emphasis on increasing public participation. Involving more human commenters, sources, and fact checkers in the process, he argues, will create a more humane result in regulation.