The Attack on Sunstein.

Barack Obama's plan to nominate Cass Sunstein to the position of head of the Office of Information and Regulatory Affairs has been attacked by some on the left, as Jonathan Adler notes. Over the course of his career, Sunstein has taken many controversial positions that have offended people on both the right and left, but his support for the regulatory state has not wavered, nor has his concern for protection of the environment, the health and safety of workers, consumer protection, and other regulatory goals that we associate with New Deal liberalism. Sunstein has strong liberal instincts—his work is animated by his concern for the rights and well-being of poor and vulnerable people and oppressed groups—and he believes that government is there to help. But what makes his work so interesting and influential is that he has a hard-headed appreciation of the problems of government, and has explored, with extraordinary imagination, approaches to regulation that harness the power of government without unduly infringing on people's freedom or in other ways producing bad outcomes.

The approach that has received the most attention recently is Sunstein's argument (with Dick Thaler) in support of what they call "libertarian paternalism," government policies that help prevent errors that people predictably make because of cognitive biases (Sunstein is a prominent critic of the rational actor model used by economists) without interfering with the choices of sophisticated people who know their interests better than the government does. This book is a perfect example of how Sunstein thinks. He shares the liberal-friendly view that people do not always act in their rational self-interest and therefore benefit from government regulation, but he rejects the strongly paternalistic policies that have done more harm than good and are in any event politically unpopular and have led to backlash. His middle way is a sophisticated attempt to support a kind of regulation that might do some good and enjoy political support from both sides of the spectrum, and hence actually have a chance to persist across administrations and vicissitudes in public opinion.

What appears to have gotten Sunstein into trouble among the left is his support of cost-benefit analysis. Cost-benefit analysis, like libertarian paternalism, is a middle way between the deregulatory impulses of conservatives and the traditional regulatory agenda of those on the left. It is by no means a perfect instrument of regulation, and legitimate concerns about it have been raised—leading to a long-running academic debate about how it can be modified and improved. Unfortunately, cost-benefit analysis is a red flag for environmentalists, who associate it with the deregulatory philosophy of the Reagan administration, when it was first introduced in OIRA as a mechanism for screening most types of government regulation. And it is true that some in the Reagan administration saw cost-benefit analysis as nothing more than a bureaucratic hurdle, a measure for slowing down regulation. But from the beginning, cost-benefit analysis has had the support of moderates and liberals (prominently, Ricky Revesz, for example, who has recently published a great book urging progressives to drop their opposition to it) who see it as a tool of good governance, not as a means for strangling regulations at their birth. Reagan himself was goaded into regulatory action when a cost-benefit analysis showed that ozone depletion generated enormous costs, and could be addressed with a cost-effective treaty, which has been a considerable success.

Sunstein's own views of cost-benefit analysis are much more nuanced than the writings of some of his critics acknowledge. As his numerous writings on the topic make clear, he does not believe that the well-being of future generations should be ignored. On the contrary, Sunstein strongly supports a climate treaty because cost-benefit analysis shows that the costs of climate change will be considerable for future generations and are already substantial for poor people living in developing countries today--as every cost-benefit analysis shows, the benefits of greenhouse gas abatement vastly exceed the costs. (The Center for Progressive Reform mystifyingly claims that he is not particularly concerned about climate change, based on a misreading of a paper he wrote (with me).) And he is well aware that cost-benefit analysis can produce misleading evaluations when the rich and poor have different valuations for regulatory benefits. The main advantage of cost-benefit analysis is that it introduces transparency into an opaque regulatory process, forcing regulators to be clear about the nature of the tradeoffs one unavoidably must make. Some of these tradeoffs are ugly and do not have obvious answers—when scarce resources force one to choose between a regulation that reduces mortality risk for the elderly and a regulation that provides greater benefits for children, which should one choose? Not everyone will agree with Sunstein's conclusions on these issues, but he should receive credit for his intellectual honesty and academic integrity.

But isn't cost-benefit analysis hopelessly manipulable? That is another argument of CPR. In fact, like any decision procedure, it can be manipulated, but when it is manipulated, it is not hard to tell and cry foul. Indeed, the critics of cost-benefit analysis have produced paper after paper showing that OIRA or independent economists have produced defective cost-benefit analyses—which would of course not be possible if it could be so easily manipulated to produce the results one wants. What is true is that the government has not performed cost-benefit analyses very well over the last twenty-five years. This is a reason to improve its efforts, not to abandon them.

The critics of cost-benefit analysis have been trying for thirty or more years to come up with a better decision procedure, and have failed. They usually say that regulatory agencies should just do what Congress asks them to do; but the problem is that Congress gives extremely vague guidance that has to be interpreted one way or another, and in the absence of a clear decision procedure, it is too easy for agencies to rationalize whatever they think might make sense or be politically saleable at a particular time. Cost-benefit analysis, done properly, should strengthen the case for regulation by showing people that it actually serves their interest, rather than the agendas of interest groups. At a time when public support for environmental protection measures appears to be waning, the importance of this objective can hardly be exaggerated.

Sunstein is one of the most talented academics around. With his deep knowledge of government regulation, he would be the perfect head of OIRA. Among the many people I have met in academia and government, he is one of the least ideologically rigid, one of the most open to argument and evidence. His critics should at least admit that he will give a fair hearing to their concerns. He would be an extraordinary asset for the Obama administration.

Shelby (mail):
To the (very limited) extent that I have relevant knowledge of Sunstein and his work, I like him. He's not who I would appoint to head OIRA, but he's as good a choice as I would ever expect to get from Obama. I do wish, though, that he would take the "libertarian" tag off his approach; "weak paternalism" is more accurate and less polarizing (for both libertarians and those hostile to libertarianism).
1.27.2009 2:25pm
Avatar (mail):
Er, not to bring up an irrelevant point, but cost-benefit analysis of climate change isn't nearly as kind to the "action now!" crowd as you suggest here. The analysis is extremely sensitive to the discount rate used and the estimates of potential future damage. Nevertheless, it works out that climate change is one of the least "efficient" uses of current funds in the relief of human misery (at least, according to the recent UN panel of economists, who subjected a whole range of potential areas of trouble to cost-benefit analysis and concluded that what we should really be working on is water purification; climate change was dead last.)

This is sensible if you think about it. Any time you have "tremendous potential risks of unknown quantity far in the future", changing the discount rate, the likelihood of the disaster scenario, or the magnitude of the disaster will radically affect any cost/benefit assumption you're making. And there are good reasons for expert opinion to vary on all of these factors... So it really does become an instance of "let's pick and choose our assumptions", and it can be done honestly or dishonestly.
1.27.2009 2:30pm
Al Maviva:
A Rational Debate Over Cost-Benefits Analysis, in One Act:

Q: Would you do anything to save the environment?

A: Yeah, sure.

Q: How 'bout saving a child. Would you do anything to save a child?

A: Sure! Anything at all. You can't put a value on human life, especially not a child's life. Children, they are the future. Right?

Q: Okay, it'll cost a hundred trillion dollars to do save the environment and many people will die as a result of starvation, disease, and other factors that do not now trouble us. To save that child I mentioned, we're going to need your liver.

A: No frickin' way then. Screw the environment. I don't even eat Snail Darters. And to hell with that kid. I need my liver.

Q: Fascist! Hater!

A: Collectivist fool!
1.27.2009 2:58pm
His critics should at least admit that he will give a fair hearing to their concerns.

Perhaps that is what his critics are afraid of.
1.27.2009 3:13pm
Thorley Winston (mail) (www):
His critics should at least admit that he will give a fair hearing to their concerns.

We heard much the same about Obama but so far "fair hearing," means "pretend to listen and do what he was always planning to do anyway." I don't see why Sunstein's critics should believe that he's any different in that regard.
1.27.2009 3:22pm
Chris B:
I really can think of few better than Sunstein for this post. I've read a handful of his articles, been exposed to his thoughts now and then through school and practice, and I recently read Nudge. The guy's entire being seems to be identifying these little regulatory nuances that government and agencies present, thinking deeply about them, giving real weight to both choice and government solutions, and trying to find the right way to go about things. As Eric points out, many of his proposals are high on the innovation and low on the cost. The idea that cost-benefit analysis is some kind of dealbreaker is too silly to be taken seriously, yet it is. As Eric also notes, some of that is the fault of those who used that mantle previously (many conservatives), but here's a guy who is going to try to do it right, and will tell you exactly what he's doing and will listen if you have ideas for improving it. These are all unmitigated goods.

In any event, the Economist mentioned Sunstein recently in a Lexington article on a related topic re: Obama. Economist Article
1.27.2009 3:34pm
Mark S. Devenow Esq. (mail):
"(I)ntellectual honesty and academic integrity...", give me a break. These are curious attributes to impute to anyone married to an antisemite like Samantha Power, let alone a Jew so betrothed. Sunstein's, properly characterized left wing views apart, this is the kind of person who would be a great addition to any administration bent on changing the form of the economy by serving up casuistry in lieu of "intellectual honesty." I realize that ties are/get created in the cloistered walls of academe, but Eric Posner's encomium skirts so far from the truth as to be offensive.
1.27.2009 4:22pm
Bill Owens:
I know that Prof. Sunstein is a prolific author, but I've not read any of his books. To get the best idea of his philosophy with regards to cost-benefit analysis and regulation, is there one best place to start?
1.27.2009 4:23pm
Patrick S. O'Donnell (mail) (www):
In answer to Bill Owens, I would recommend Sunstein's Risk and Reason: Safety, Law and the Environment (2002). Sunstein also contributes to the volume on CBA edited by Matthew Adler and Eric Posner (2001), essays which first appeared in The Journal of Legal Studies.
1.27.2009 4:38pm
Mark S. Devenow:


Casuistry, cloistered and encomium aside, I'm wondering what your evidence is that Sunstein is not intellectually honest (and thus a casuistry ... -er) aside from his marriage.
1.27.2009 4:57pm
Oh, and to Sunstein himself -- big fan.
1.27.2009 4:59pm
therut (mail):
Married to HER!!!!!!!!!!!!!!! I'm sorry but I had no idea.
1.27.2009 5:59pm
Dr. T (mail) (www):
The approach that has received the most attention recently is Sunstein's argument (with Dick Thaler) in support of what they call "libertarian paternalism...
Cass Sunstein tries to label himself a libertarian, but he clearly belongs in the socialist-leaning, nanny-state government camp. His unique approaches to nanny-statism are attempts to make nanny more efficient; I doubt that he cares much if nanny infringes upon our liberties.

Since Obama is a socialist-leaning, nanny-state supporter himself, Sunstein would be a good fit. But, his own party may force him to choose a less 'tainted' OIRA head. Welcome to the presidency, Mr. Obama!
1.27.2009 6:20pm
LN (mail):
The evidence that Samantha Power is anti-Semitic is somewhat lacking.
1.27.2009 6:38pm
george (mail):
It's clear that Cass has made hash of his personal life over a period of years. It's also clear that he's a bright guy, can be personally charming in an absent minded professor sort of way, and has a disarming shy geek persona that works well in the classroom.

None of this suggests that he'd be any good at runnign a bureaucracy. His office, at least at Chicago, suggested that he was disorganized as all get out. I can't picture him as an administrator. If this is going to work, he'll need a very strong deputy.
1.27.2009 7:13pm
LM (mail):
Weren't "Casuistry" and "Eric's Encomium" former names of Spinal Tap?
1.27.2009 9:10pm
Guesty McGuesterson:
Not only is criticizing his abilities because of his choice of spouse absurd, since when are Jews named Cass? Don't let his last name fool you.
1.27.2009 9:37pm
Steve in CT (www):
There's been some discussion in certain areas of the internet, regarding Sunstein's support for animal rights. Would this position allow him any influence in this area?

Talking pets: Obama's guru wants animals to sue you

Exposed: The Secret Animal Rights Agenda Of America's Next Regulatory Czar
1.28.2009 5:39am

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