During the last decade, governments have shown increasing interest in curbing the growth of regulation by requiring that one or more regulations be removed before a new regulation can be added. We provide a comprehensive review of this innovation in regulatory policy. There are three main conclusions that flow from our analysis: First, while some governments claim this policy has made regulatory agencies more sensitive to regulatory costs, none of the countries we review has demonstrated that this policy innovation has actually led to improvements in economic efficiency. Second, all of these policies are implemented in conjunction with a requirement related to the economic impact of regulations. Typically, the economic requirement is that the costs associated with the new regulation be less than the costs associated with the regulations being removed. For existing applications, these costs have been defined narrowly, and they do not provide a good measure of the full social costs of a policy. The US appears to be adopting a markedly different approach that will consider both economic costs and benefits. Third, we find support for the hypothesis that centrist or conservative political parties are more likely to implement these policies. We argue that the requirement to remove one or more new regulations before adding a new regulation is best understood in terms of symbolic politics.
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Robert Hahn is a senior fellow at the Technology Policy Institute and a visiting professor and former director of economics at the Smith School of Enterprise and the Environment at Oxford University. He is also a senior policy scholar at the Georgetown University Center for Business and Public Policy. Bob has served on the faculties of Harvard and Carnegie Mellon, and has also held senior appointments at AEI and Brookings.
Bob is currently conducting several economics experiments aimed at improving productivity, and promoting growth and sustainability. He also continues to do research on government regulation, Internet policy, and understanding the benefits of breakthrough innovations. He served as a commissioner on the U.S. Commission on Evidence-Based Policymaking. Many of the findings of that Commission were recently enacted into law as The Foundations for Evidence-Based Policymaking Act.
