New Web Article Explores the Racism of Regulatory Cost-Benefit Analysis

James Goodwin

Oct. 15, 2020

Recently, the Center for Progressive Reform (CPR) launched its Beyond 12866 initiative, which seeks to promote progressive regulatory reform as a key component of the progressive movement’s efforts to build a more socially just and equitable America. To accomplish this goal, though, we must come to grips with how the regulatory system is perpetuating racial injustice and reinforcing race-based inequities. In a new web article, I take this first step by sketching out some of the ways in which cost-benefit analysis has contributed to structural racism in the broader regulatory system.

As the piece explains, regulatory cost-benefit analysis purports to adhere to a kind of “moral objectivity,” which precludes considerations of important American values like equity, justice, and fairness. Conveniently, this studied “see no evil” approach has rendered the methodology an effective conduit for injecting racism into regulatory decision-making – much as facile claims of “color blindness” have helped provide cover for policies with racist effects. In particular, false objectivity enables racism to be smuggled in at two key steps in the cost-benefit analysis process: (1) constructing the analytical baseline and (2) the identification and evaluation of discrete potential policy impacts.

Another defining feature of cost-benefit analysis contributes to its inherent racism: monetization. In order to compare costs and benefits, economists conducting analyses try to convert things like health, clean air and water, a pollution-free environment, and other things not fundamentally monetary in nature into dollar figures, so that they can be squeezed into a spreadsheet and balanced against monetary costs. Because money is the common metric for evaluating the pros and cons of regulations, cost-benefit analysis is thus systematically skewed to favor those who have of a lot of it. This bias is further reinforced by the arbitrary methodological techniques that it employs to convert such non-market goods as the protection of a human life into dollars-and-cents terms. Notably, the methodology has defaulted to “willingness to pay” measures, which, to the extent they are constrained by one’s ability to pay, disadvantages the poor. Given the structural links between poverty and race in the United States, these kinds of biases likewise take on a racist dimension.

Finally, the dividing line that separates those policy milieus that have been historically subjected to cost-benefit analysis from those that have not is itself a revealing indicator of the methodology’s racism. Thus, whereas policy arenas that have a strong potential for remediating racial injustice – such as worker’s rights or public health – are subject to its strict constraining forces, others that are noteworthy for their contributions to racial oppression – namely, local law enforcement and national security – have been categorically exempted from the practice.

The article offers just an initial exploration of the structural racism of cost-benefit analysis. I hope it inspires others to investigate how the regulatory system, as well as the key institutions it comprises, currently serve to reinforce racial injustice.

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