Although federal regulation of vehicle fuel economy is often seen as environmental policy, over 70% of the estimated benefits of the 2017–2025 federal standards are savings in consumer expenditures on gasoline. Rational-choice economists question the counting of these benefits since studies show that the fuel efficiency of a car is reflected in its price at sale and resale. We contribute to this debate by exploring why most consumers in the United States do not purchase a proven fuel-saving innovation: the hybrid-electric vehicle (HEV). A database of 110 vehicle pairs is assembled where a consumer can choose a hybrid or gasoline version of virtually the same vehicle. Few choose the HEV. A total cost of ownership model is used to estimate payback periods for the price premiums associated with the HEV choice. In a majority of cases, a rational-choice explanation is sufficient to understand consumer disinterest in the HEV. However, in a significant minority of cases, a rational-choice explanation is not readily apparent, even when non-pecuniary attributes (e.g., performance and cargo space) are considered. Future research should examine, from a behavioral economics perspective, why consumers do not choose HEVs when pricing and payback periods appear to be favorable.

This paper compares the U.S. Environmental Protection Agency’s (EPA) ex ante compliance cost estimates for the 2004 Automobile and Light-Duty Truck Surface Coating National Emission Standards for Hazardous Air Pollutants to ex post evidence on the actual costs of compliance based on ex post cost data gathered from a subset of the industry via pilot survey and follow-up interviews. Unlike many prior retrospective studies on the cost of regulatory compliance, we use this newly gathered information to identify the key drivers of any differences between the ex ante and ex post estimates. We find that the U.S. EPA overestimated the cost of compliance for the plants in our sample and that overestimation was driven primarily by differences in the method of compliance rather than differences in the per-unit cost associated with a given compliance approach. In particular, the U.S. EPA expected facilities to install pollution abatement control technologies in their paint shops to reduce emissions of hazardous air pollutants, but instead these plants complied by reformulating coatings.

Methods for identifying relevant policy impacts for valuation in benefit-cost analyses (BCAs) have received relatively little attention in academic research, applied policy analyses, and guidance documents. In this paper, we develop a systematic, transparent, and replicable process that draws upon information contained in records of Congressional hearings to identify relevant policy impacts for valuation in a BCA. Our approach involves classifying – and subsequently analyzing – statements from witnesses testifying in Congressional hearings on the topic of the BCA. By using Congressional hearings as the basis for our approach, we are identifying potential policy impacts from information provided during the very process the BCA is intended to inform. However, because this approach is quite resource-intensive and would be somewhat burdensome for agencies to implement, it may be best applied in the academic realm, with identified impacts resulting from such applications then made available to agency personnel for potential inclusion in BCAs. Using the case of the Glen Canyon Dam, we demonstrate the approach and its resulting improvements in the quality and transparency of the BCA it was intended to inform.

Crime is an important outcome in many social policy evaluations. Benefits to society from preventing crime are based on avoiding victimization and freeing criminal justice system resources. For the latter, analysts need information about the marginal cost of policing for different types of crime across jurisdictions; however, this information is not readily available. This paper details key economic concepts relevant to law enforcement services, and then combines publicly available police expenditure data with insights from observational and time-diary studies to generate state-level, crime-specific, average variable cost estimates for crime-response services conducted by police by crime type. Since there is considerable uncertainty concerning various parameters underpinning these calculations, we use Monte Carlo simulation methods to incorporate the uncertainty into our estimates. This study finds that the U.S. population-weighted average variable cost of law enforcement response per police-reported Part 1 violent crime is $10,900, ranging from $6900 to $15,400 at the 10th and 90th percentiles, respectively. For a Part 1 property crime, the equivalent figure is $1300, with a range from $700 to $1700.

Two cost-benefit analysis methods developed from differing economic situations and analytical objectives in the 1960s and 1970s. The Trade Policy Approach of Ian Little and James Mirrlees analyzed international competitiveness of projects producing private goods and physical infrastructure in markets severely distorted by trade protectionism; it was adopted in 1975 by the World Bank; the multilateral regional development banks followed suit. The Public Finance Approach of Arnold Harberger developed from comparative statics analyses of public projects and policies in the United States and was adopted at the US Agency for International Development and in several Latin American countries. The original Trade Policy Approach included social analysis too tedious for everyday application, leading an efficiency-only version to emerge and be popularized by teaching materials from Price Gittinger and colleagues in the World Bank’s Economic Development Institute. It proved the right method for World Bank use until Washington Consensus reforms, the GATT and WTO reduced price distortions, and slowly restored private international financial flows gave private industry access to international private investment capital. Official Development Assistance (ODA) portfolios responded by refocusing on public goods and market failures, leading to decreased utility of the Trade Policy Approach and decreased use of cost-benefit analysis at the World Bank. A 1990s drive in the World Bank to switch from the Trade Policy Approach to the increasingly relevant Public Finance Approach resulted in an internal manual and operational guidelines, but not a book from a distinguished university press, commonly presumed to signal official Bank policy. It is time for that long-overdue book to be published.