Reforming Risk Regulation

Abstract

A commonly observed characteristic of risk regulation policy is the absence of coherent prioritization of risks and inconsistencies in the stringency of controls on risks that are regulated. The purpose of this article is to examine the roots of this problem in the way both citizens and their elected representatives deal with uncertainties associated with catastrophic risks, why elected politicians respond to this problem in constructing regulatory institutions that are prone to inconsistency, and whether various proposals to reform the regulatory process would be likely to improve its performance. The main conclusions are that most reform proposals are strongly inconsistent with democratic responsiveness, which is the most important principle that elected officials use in designing programs, and that the only plausible means for making regulatory policy more coherent is to increase the resources of regulatory agencies so as to give them greater control over the public agenda in risk policy.

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References

1. For an excellent summary of this problem, with some compelling examples, see Stephen Breyer , Breaking the Vicious Circle (Cambridge, MA: Harvard University Press, 1994).

2. For the classic statement of this principle and its implications for liability law, see Guido Calabresi , The Costs of Accidents (New Haven, CT: Yale University Press, 1970).

3. For a more complete discussion of the issues in this and the next paragraph, see Roger G. Noll , “Government Regulatory Behavior: A Multidisciplinary Survey and Synthesis,” in Regulatory Policy and the Social Sciences, ed. Roger G. Noll (Berkeley: University of California Press, 1985).

on executive oversight, see Commission on Law and the Economy , Federal Regulation: Roads to Reform (Washington, DC: American Bar Association, 1980).

5. Congress, Senate, Committee on Government Organization , Study on Federal Regulation, I: The Regulatory Appointments Process (Washington, DC: Government Printing Office, 1977).

6. Examples of such proposals are to apply stricter standards to congressional delegation of rule-making authority and to return to some form of substantive due process in judicial review. Many of these proposals are discussed, usually skeptically, in Robert E. Litan and William D. Nordhaus , Reforming Federal Regulation (New Haven, CT: Yale University Press, 1983), pp. 100-109, 113-116.

Terry M. Moe , “Politics and the Theory of Organization,” Journal of Law, Economics and Organization, 7(55):106-129 (1991).

8. For more discussion of this point and its relationship to cognitive mistakes in evaluating risks, see Roger G. Noll and James E. Krier , “Some Implications of Cognitive Psychology for Risk Regulation,” Journal of Legal Studies, 19(4):747-779 (1990).

9. For an application of these ideas to water pollution regulation, see Wesley A. Magat , Alan J. Krupnick , and Winston Harrington , Rules in the Making (Washington, DC: Resources for the Future, 1986).

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10. Each of these issues is discussed in McCubbins , Noll , and Weingast , “Administrative Procedures.”

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11. For a survey of the relevant literature, see William S. Comanor , “The Political Economy of the Pharmaceutical Industry,” Journal of Economic Literature, 24(3):1178-1217 (Sept. 1986).

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12. For a discussion of administrative procedures in Japanese telecommunications policy, see Roger G. Noll and Frances M. Rosenbluth , “Telecommunications Policy: Structure, Process, Outcomes,” in Structure and Policy in Japan and the U.S., ed. Peter Cowhey and Mathew D. McCubbins (New York: Cambridge University Press, 1995).

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13. For a complete discussion of the relationship between administrative procedures at the Atomic Energy Commission and the economic viability of nuclear power, see Linda R. Cohen , “Innovation and Atomic Power: Nuclear Power Regulation, 1966-Present,” Law and Contemporary Problems, 43(1):67-97 (Winter-Spring 1979).

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14. For an interpretation of the intent of Congress in passing this act, see McNollgast , “Legislative Intent: The Use of Positive Political Theory in Statutory Interpretation,” Law and Contemporary Problems, 57(1):30-35 (Winter-Spring 1994).

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15. For a discussion of this feature of regulation, see Terry M. Moe , “The Politics of Structural Choice: Toward a Theory of Public Bureaucracy,” in Organization Theory: From Chester Barnard to the Present and Beyond, ed. Oliver E. Williamson (New York: Oxford University Press, 1990), pp. 116-153.

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16. Paul A. David and Julie Ann Bunn , “The Economics of Gateway Technologies and Network Evolution: Lessons from Electricity Supply History,” Information Economics and Policy, 3(2):165-202 (1988).

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17. Litan and Nordhaus , Reforming Federal Regulation, pp. 133-158.

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18. Breyer , Breaking the Vicious Circle, chap. 3.

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19. This proposal and its problems are discussed in ibid., chap. 2.