While teaching benefit-cost analysis (ECO 4660/5660) the other day I googled Reagan's EO 12291 and found a New York Times article from November 1981. It sounds like many of the hopes and fears never materialized:
When President Reagan signed Executive Order 12291 on Feb. 17, he transformed with a stroke of his pen what had been a useful economic tool into an imperative of Federal decision making.
The order is designed to reduce the burden that Federal regulation places on the economy. Among other things, it provides that, to the extent the law permits, ''regulatory action shall not be undertaken unless the potential benefits to society from the regulation outweigh the potential costs to society.''
Cost-benefit analysis has been used for some years by economists, including Government analysts, as an aid to efficient decision making. But by making the quantification of the pluses and minuses of Administration action a central element of policy making, the President has touched off an intense economic, political and philosophical debate.
Administration and business officials and others who applaud the President's decision say that the uniform application of cost benefit analysis, which simply looks at the returns that come from any action in relationship to the cost, will stem the tide of unnecessary and excessive regulations that they say have been a severe and growing burden to the nation's economy.
They insist that without it the nation has been forced to spend many billions of dollars on actions that do not return anywhere near commensurate benefits to society.
But opponents of the measure, including those concerned with the Administration's efforts to reduce environmental, health and safety programs, view the cost-benefit requirement as little more than a justification for deregulating business and industry.
They also complain that the rule requires assigning dollar values to things that are essentially not quantifiable: human life and health, the beauty of a forest, the clarity of the air at the rim of the Grand Canyon.
The intensity of opposition to the use of cost-benefit analysis in the regulatory process ranges from those who oppose any application on the ground that, once adopted, it would reduce all decisions to simple-minded weighing of dollars, to those who think it is a useful tool for administrators but worry about its rigid application.
There is broad agreement that the process can be manipulated by choosing numbers that will produce the desired results. But some opponents of universal application of cost-benefit analysis concede that it can unmask exceptionally rigid rules.
As it turns out, many environmental regulations generate benefits that exceed costs, no doubt partly because some clever economists figured out ways to assign dollar values to things "that are essentially not quantifiable."