Last week, Michael and I attended the annual conference for the Society for Benefit-Cost Analysis in Washington, D.C.
This is the once-a-year conference where academics, agency economists, and independent consultants get together to talk about the state of and cutting-edge research around benefit-cost analysis.
One of the sessions I went to that stuck out to me was on the topic of frontiers of benefit-cost analysis being investigated by federal agencies. In March 2023, the National Science and Technology Council established a subcommittee on the topic. The subcommittee was focused on helping agencies conduct three specific tasks:
Sharing knowledge and expertise on advancing benefit-cost analysis,
Aiding each other in accessing new data, methods, and expertise, and
Identifying areas where additional research, including by non-governmental actors, could meaningfully advance agency capacity to quantify or monetize costs and benefits.
At the Annual Conference, representatives from the Subcommittee presented their 2023 Annual Report, which covered some of the most pressing needs by agencies in the area of benefit-cost analysis. In this report, the authors identified five areas where federal agencies needed help understanding how to quantify and monetize costs and benefits for use in regulatory analysis.
Non-Fatal Health Effects
The value of a statistical life is a well-traveled path in benefit-cost analysis. Much more sticky for analysts is how to value the cost of effects that reduce quality of life without ending lives. Quality Adjusted Life Years (QALYs) have been used in medical cost-effectiveness analysis for decades, but this methodology has some limitations that make them hard to use in benefit-cost analysis. Guidance on how to quantify and monetize the impact of non-fatal health effects could be valuable for evaluators doing regulatory impact analysis.
Ecosystem Services Effects
When an ecosystem deteriorates, it can cause harm to humans. For instance, removal of wetlands can reduce the ability of the water system to remove toxins. Evaluation and monetization of these impacts could help agencies such as EPA better evaluate their interventions.
Wildfire and Extreme Weather Effects
Estimating what the future impact of extreme weather will be comes with a lot of uncertainty. Creating estimates that are credible and sound will help policymakers create regulations related to climate change in assessing the impact of their interventions, as well as giving tools to emergency management agencies such as FEMA to use in planning.
Information and Transparency Effects
Much of what federal agencies like the Food and Drug Administration (FDA) do is require information-sharing so consumers have a clear idea of what they are purchasing. Capturing the economic value of these information requirements can be difficult, however. Clearer estimates of these can help agencies balance the costs of information distribution with their potential benefits.
Effects of Public Benefit Programs
Many policymakers are interested in the multigenerational impacts of public benefit programs like SNAP (formerly known as “food stamps”). Giving a full picture of what the impacts of these programs are will help policymakers assess the costs and benefits associated with extension or regulation of benefits.
In addition to these five, the subcommittee also identified two cross-cutting issues: analyzing distributional effects and analyzing risk.
If you are an early-career researcher who wants to make a difference, focusing on one of these topics would put your work in line with what policymakers need today. Now is a good time for researchers who want to be able to make a difference in the policy space.