Advocacy Economists participate in the annual Society for Benefit-Cost Analysis Conference
By Michael McManus, Regulatory Research Fellow
Late last week the SBA Office of Advocacy participated in the annual Society for Benefit-Cost Analysis Conference. The conference, widely attended by government employees and academics alike, works to improve the theory and practice of benefit-cost analysis.
Benefit cost analysis or economic analysis is an important tool used by federal agencies to understand the effects of their regulations and actions. Under the Regulatory Flexibility Act, the Office of Advocacy reviews agency’s economic analysis to ensure the costs of regulations on small businesses have been correctly estimated and that cost-minimizing alternatives have been considered. A well-crafted economic analysis helps agencies and Advocacy ensure that small businesses are not being unduly burdened by a new rule. Advocacy was eager to take advantage of this opportunity to promote the value in considering small businesses in these types of analyses, and to share the resources we have available to help guide agencies’ economic analysis.
Office of Advocacy economists Patrick Delehanty and Lindsay Scherber chaired a roundtable discussion focused on how agencies currently analyze the effects of regulations on small businesses and potential improvements to the process. Advocacy regulatory economist Jonathan Porat was joined by senior economists from the Consumer Finance Protection Bureau, Federal Drug Administration and the White House’s Office of Management and Budget.
The panel discussed challenges faced when creating BCAs and opportunities to improve these analyses to focus on specific small business effects. All panelists spoke about the lack of data on the cost of compliance, specifically for smaller industries. However, Porat was able to highlight ways that Advocacy can reach out to small businesses, such as roundtables, to help fill in data gaps. Advocacy also highlighted the importance for agencies to consider small business effects early in the regulatory process so they can more easily develop cost-saving alternatives. Alternatives that lower costs on small businesses are required in an economic analysis under the Regulatory Flexibility act, and Advocacy economists ensure they are properly considered when finalizing a new rule.
The conference’s keynote speakers, Senators James Lankford (R-OK) and Heidi Heitkamp (D-ND), spoke about their work trying to reform the United States’ regulatory system. In the talk with former OIRA Administrator Susan Dudley, they discussed a desire to ensure agencies are encouraged to make rules that are not overly burdensome or duplicative. Specifically, they spoke about wanting to alter the current system so the public and affected parties, including small businesses, are able to provide their expertise, ensuring that agencies have the best information to inform regulatory policy.
Assistant Chief Counsel Kevin Bromberg also participated in the day during a roundtable discussion on the role of Cost-Effectiveness in EPA’s water rules. Director of Economic Research, Christine Kymn, also chaired a session focused on the regulatory process and Research Economist Daniel Wilmoth presented his paper regarding BCA discounting methods. SBA Advocacy’s involvement in the conference ensured that small business interests would not be overlooked.