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James Broughel

James Broughel



Articles by James Broughel

Constructing a Red Tape Reduction Executive Order

February 11, 2021

The term “red tape” describes outdated, unnecessary, or otherwise excessively burdensome regulations that do more harm than good. Whereas some regulations are justified, red tape imposes unnecessary costs on society, is often regressive, slows economic growth, and limits upward mobility for the most disadvantaged in society.
Without the necessary procedures in place to constrain red tape, it gets out of hand. Regulators have incentives to write regulations, but very often they have little or no incentive to review or remove old regulations that have outlived their usefulness. Furthermore, regulations create constituencies that benefit from the regulations’ continued existence, and these constituencies fight to preserve regulations once enacted, even when those regulations are causing

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A Sensible Sunset Review Process for Kansas

January 26, 2021

Chair Estes, Vice Chair Olson, Ranking Member Faust-Goudeau, and members of the committee:
My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University. I am also an adjunct professor of law at Antonin Scalia Law School at George Mason University. My research focuses on regulatory procedures, cost-benefit analysis, and economic growth. Thank you for the opportunity to submit this written testimony today on regulatory reform in Kansas.
The US Department of Health and Human Services (HHS) recently finalized a regulation that attaches a sunset provision to most of its rules. My own research helped inform the economic analysis that accompanied that regulation. As part of that effort and my previous research, I learned a number of lessons that

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Reflections on Regulatory Reform in New Jersey

October 21, 2020

Chair Johnson, Vice Chair Karabinchak, and members of the committee:
My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University. I am also an adjunct professor of law at George Mason University. My research focuses on regulatory procedures, cost-benefit analysis, and economic growth. Thank you for the opportunity to submit testimony today on regulatory reform in New Jersey.
Achieving meaningful reductions in the regulatory burden is hard. That is a lesson from a 2018 report I wrote about New Jersey’s regulatory reform program during the administration of Governor Chris Christie. New Jersey’s past experiences with regulatory reform can provide valuable insights for future reform efforts, such as those being considered before this committee

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Administrative Rule Reform in Oklahoma

September 22, 2020

Chair Jech, Chair Gann, and members of the committees:
Good morning. Thank you for the opportunity to speak today regarding the joint study being produced on Oklahoma administrative rules reform. My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University in Arlington, Virginia, and an adjunct professor at the Antonin Scalia Law School at George Mason University. My research focuses on state regulatory institutions, the sources of economic growth, and the economic analysis of regulations.
I will be touching on three topics today:
Regulation is necessary in some cases. It can be justified to protect health, safety, and the environment. The accumulation of regulation, however, has a real cost, which should be kept in mind.
The Mercatus

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The Mortality Cost of Expenditures

July 21, 2020

This paper updates the mortality cost of expenditures, which has relevance to a broad range of policies, including regulations, wars, and COVID‐19 restrictions. Because changes in income lead to changes in mortality risk, health investments costing more per life saved than a threshold cost‐per‐life‐saved cutoff level are expected to increase mortality risk. This article discusses the mechanisms driving this relationship and provides recent empirical support. The 2019 cost‐per‐life‐saved cutoff level at which expenditures increase mortality risk has a lower bound of $83.1 million and an upper bound of $133.8 million, with a midpoint of $108.5 million.

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The Social Discount Rate: A Primer for Policymakers

June 30, 2020

The social discount rate used in cost-benefit analysis (CBA) is an interest rate applied to benefits and costs that are expected to occur in the future in order to convert them into a present value. This conversion is done to ascertain what those benefits and costs are worth today. The social discount rate is widely considered to be one of the most important inputs in CBA in that small changes in this rate can result in large swings in present-value calculations, thereby having a major influence on whether a project passes or fails a cost-benefit test. However, the social discount rate is widely misunderstood for a variety of reasons. This primer explains the basic conceptual issues involved with the social discount rate and tries to clear up some common misunderstandings.
Basic Concepts

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Compounding Pharmacies Offer a Sensible Way to Tackle Drug Shortages

May 4, 2020

In early April, President Trump generated considerable controversy for seeming to endorse hydroxychloroquine, an antimalaria drug, which some claim has shown promising results in treating COVID-19. The FDA subsequently issued a warning about potential side effects from using the drug. But in the interim, media attention led to a surge of purchases of the drug, which in turn, has led to shortages affecting regular users who need hydroxychloroquine for other purposes, such as treating arthritis or lupus.
More generally, the pandemic is increasing demand for drugs of all kinds, from acetaminophen to asthma inhalers, raising concerns about shortages for a wide range of prescription medications needed in COVID-19 treatment. While the FDA has responded to these concerns by adding some drugs to

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COVID-19 Reveals the Need for a Regulatory Reset

April 17, 2020

The COVID-19 pandemic has highlighted the many deep inadequacies of the regulatory system of the government of the United States. Nearly every day brings news about red tape being rolled back because it has hampered efforts to test for COVID-19, to treat patients in need of medical care, or to send checks or make loans to everyday Americans who are losing their livelihoods.
For now, the United States remains in the midst of an emergency, which has to be the priority. When the pandemic has receded, however, policymakers should prioritize reviewing these regulations to determine what went wrong. This evaluation will require setting up a systematic process for reviewing existing requirements and identifying those in need of modification. Although this kind of institutionalized review process

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Recommendations for Improving Department of Energy Regulatory Impact Analysis for Energy Conservation Standards

March 17, 2020

The US Department of Energy (DOE) is proposing supplemental amendments to its decision-making process for selecting energy conservation standards. Specifically, the DOE is proposing changes that would require the agency to conduct an analysis of the costs and benefits of various alternative levels of an energy conservation standard in order to gauge whether a chosen standard is economically justified. This comment seeks to provide some broad guidance to the DOE on how costs and benefits of energy conservation standards should be evaluated.
My recommendations include (1) better specifying what model of consumer behavior the DOE is relying on, (2) distinguishing between individual and social discount rates in analysis, (3) better accounting for the opportunity cost of capital, (4)

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Cost-Benefit Analysis as a Failure to Learn from the Past

March 6, 2020

This short note argues that cost-benefit analysis (CBA), a tool employed by professional economists to evaluate the welfare consequences of public policies, embodies a variety of failures to heed the warnings of famous classical liberal economists. CBA attributes characteristics of individuals to society, fails to adequately account for the “unseen” consequences of policy, wipes out the future with a social discount rate as if “in the long run we are all dead,” and is an example of how the pursuit of mathematical logic can lead to failures of common sense. As a result of these problems, CBA offers a useful teaching device for students, demonstrating how even modern-day economists at the top of their profession continue to make basic errors pointed out by economists generations ago. CBA in

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The Mighty Waves of Regulatory Reform: Regulatory Budgets and the Future of Cost-Benefit Analysis

March 6, 2020

In the past 70 or 80 years, there have been three “waves” of reforms to the process of creating and managing U.S. federal and state regulations. The first wave began in 1946 with the passage of the federal Administrative Procedure Act, after which states went on to pass and formalize their own administrative procedures. The second wave began decades later in the mid-1970s, ushering in the era of cost-benefit analysis reforms for regulations. This article focuses on the third wave of regulatory reforms that appears to be sweeping the nation and includes a prediction that the next wave may include a return to some unsettled issues from the past.

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Accounting for the Opportunity Cost of Capital in Cost-Benefit Analysis

February 21, 2020

This comment presents a framework for how the Office of Management and Budget (OMB) should be thinking about the opportunity cost of capital in cost-benefit analysis (CBA). The comment begins by explaining why improvements in CBA are needed at federal agencies. Next, it discusses how to account for displaced investment in CBA using the shadow price of capital (SPC) method, which is technically the appropriate way to account for the opportunity cost of capital in CBA. It then explains why the Executive Order (EO) 13771 accounting statements, where only financial impacts are considered, are a potential improvement over analysis generally produced under EO 12866. Finally, it make several recommendations for improving the EO 13771 accounting statements.
The Shadow Price of Investment
A common

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Prompting a Regulatory Reset in Arizona

February 10, 2020

Chair Farnsworth, Vice Chairman Borrelli, and members of the committee:
Thank you for the opportunity to submit this testimony. My name is James Broughel, and I am a senior research fellow at the Mercatus Center at George Mason University and an adjunct professor at the Antonin Scalia Law School. My research focuses on state regulatory institutions, economic growth, and the economic analysis of regulations.
My testimony today centers around Senate Bill 1211 (SB1211), which is currently being considered by this committee. Specifically, I have three main points to convey:
The accumulation of unnecessary regulations can slow down economic growth and can weaken the effectiveness of regulations that are justified to protect health, safety, and the environment.
Despite real progress in recent

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