This dissertation focuses on the political economy of fisheries governance. The study develops a formal model of fisheries governance by combining the features of the common pool fishery and the political institution of lobbying; designs a laboratory fishery governance institution and conducts economic experiments to test the hypotheses derived from the formal model. Specifically, the study analyzes how fishing firms invest in efforts to influence fishery regulation and management through voluntary contribution lobbying. The study also analyses and compares contribution and effort behavior in the lobbying and the CPR using data from economic experiments.

The results indicate that lobbying to change suboptimal fishery regulations was significantly below the subgame perfect equilibrium prediction and contributions to raise the cap were significantly different than contributions to lower the cap toward the social optimum. Study results show that subjects successfully lobbied to raise inefficiently low fishing quotas, but were unable to lobby to reduce inefficiently high fishing quotas. Detailed analysis of subjects’ contribution and effort behavior suggest that despite the interesting benefit-cost duality between pure public goods and CPRs, the pattern of cooperative behavior in these two social dilemma situations was different and the level of cooperation in the voluntary contribution lobbying experiment was lower than those reported in other public goods experiments.

To provide external validity to these experimental findings, the study further analyzes and compares lobbying expenditures in the fishery sector with those in other natural resource industries using field data from the United States. A comparison of actual lobbying expenditures as percentage of valued added shows that lobbying effort in the U.S fishery sector is not significantly different than those in other natural resource industries such as mining and electric utility industries, but the pattern of lobbying is different. Whereas fishing firms lobby through associations or pressure groups, Arms in other natural resource industries lobby unilaterally. This observation suggests that differences in industrial structure and incentives influence the pattern of lobbying and the lobbying behavior of firms across industries.

The theoretical predictions derived from the formal model of fisheries governance are consistent with our experimental findings and with the field data on lobbying in the US fisheries sector. These findings suggest that heterogeneity drives rent-seeking activities in the US fisheries sector and that fishing firms attempt to circumvent political collective action problems by forming and lobbying through associations of stakeholders with relatively homogenous policy preferences.

This paper introduces a new matching mechanism that is a hybrid of the two most common mechanisms in school choice, the Boston Mechanism (BM) and the Deferred Acceptance algorithm (DA). BM is the most commonly used mechanism in the field, but it is neither strategyproof nor fair. DA is the mechanism that is typically favored by economists, but it is not Pareto efficient. The new mechanism, the Secure Boston Mechanism (sBM), is an intuitive modification of BM that secures any school a student was initially guaranteed but otherwise prioritizes a student at a school based upon how she ranks it. Relative to BM, theoretical results suggest that sBM is an improvement in terms of strategyproofness and fairness. We present experimental evidence using a novel experimental design that confirms that sBM significantly increases truth-telling and fairness. Relative to DA, theoretical results suggest that sBM can be a Pareto improvement in equilibrium but the efficiency comparison of sBM and DA is theoretically ambiguous. We present simulation evidence that suggests that sBM often does Pareto dominate DA when DA is inefficient, while sBM and DA very often overlap when DA is efficient. Overall, our results strongly support the use of sBM over BM and suggest that sBM should be considered as a viable alternative to DA.

We experimentally investigate in the laboratory prominent mechanisms that are employed in school choice programs to assign students to public schools and study how individual behavior is influenced by preference intensities and risk aversion. Our main results show that (a) the Gale–Shapley mechanism is more robust to changes in cardinal preferences than the Boston mechanism independently of whether individuals can submit a complete or only a restricted ranking of the schools and (b) subjects with a higher degree of risk aversion are more likely to play “safer” strategies under the Gale–Shapley but not under the Boston mechanism. Both results have important implications for enrollment planning and the possible protection risk averse agents seek.

The so-called credibility revolution dominates empirical economics, with its promise of causal identification to improve scientific knowledge and ultimately policy. By examining the case of rural electrification in the Global South, this opinion paper exposes the limits of this evidence-based policy paradigm. The electrification literature boasts many studies using the credibility revolution toolkit, but at the same time, several systematic reviews demonstrate that the evidence is divided between very positive and muted effects. This bifurcation presents a challenge to the science-policy interface, where policymakers, lacking the resources to sift through the evidence, may be drawn to the results that serve their (agency's) interests. The interpretation is furthermore complicated by unresolved methodological debates circling around external validity as well as selective reporting and publication decisions. These features, we argue, are not particular to the electrification literature but inherent to the credibility revolution toolkit.

We examine how monetary incentives and information about others’ dishonesty affect lying decisions and whether these two dimensions interact with each other. Our experiment consists of a repeated cheating game where we vary the monetary incentives (Low, High, and Very High) and information about others’ dishonesty (With or Without information). We find that dishonesty decreases when payoffs are Very High. Information has only a weak positive effect on average. Conditioning on beliefs, we find that those who overestimate (underestimate) cheating reduce (increase) dishonesty. Information and payoffs do not interact with each other.

We develop a theoretical framework and present a corresponding empirical analysis of the Food and Drug Administration’s irrigation water quality regulatory standard under the Food Safety Modernization Act using lettuce as a case study. We develop a stochastic price endogenous partial equilibrium model with recourse to examine the standard’s efficacy under various scenarios of foodborne illness severity, standard implementation, demand response to foodborne outbreaks, and irrigation costs. The stringency of regulation is evaluated with endogenous producer response to regulatory requirements and corresponding implications for economic surplus. The baseline results show that in the case of the lettuce market, the proposed microbial irrigation water quality regulation in the Food Safety Modernization Act (FSMA) is not cost effective relative to the existing Leafy-Greens Marketing Agreements relying on water treatment for mitigation of microbial contamination. However, FSMA can be cost effective if water treatment is sufficiently expensive.

This article examines the development and usage of e-government in Malaysia. The history of public administration reform in Malaysia demonstrates the government’s willingness to experiment with innovations seen as improving the efficiency, effectiveness and responsiveness of public services. Thus, e-government has been enthusiastically promoted by the Malaysian government and has spread across most government organisations at central and subnational levels. The article provides details of a range of services both within government and for society that are available in e-government modes. However, there are challenges to the development of e-government including adherence to traditional models of service delivery, resistance to organisational culture change by officials, preference for counter services by clients and constraints on the availability of information technology training. Mobile phones are now seen as a new way to encourage citizens to use e-government on a regular basis.

This article describes the process from first proposals in the early 1990s to project completion many years later for seven large Swedish road and railway projects. The purpose is to find reasons for the massive cost overruns as well as explanations for why projects are brought to completion despite much higher costs than when the decision to build was made. Cost overruns are set in an institutional context to highlight the interplay among national, regional, and local policymakers. National investment programs are seen as promises by other parts of society, irrespective of whether project costs increase during the process toward procurement and implementation. Another aspect is that the infrastructure manager’s administrative framework currently makes it impossible to compare costs in contracts with final cost, meaning that there is no institutionalized learning process in place. Design preparations and the estimation of costs for new projects must therefore be done without an understanding of what has been working well in the implementation of previous projects. While Benefit-Cost Analysis (BCA) played no role in the planning of the seven projects, the article sends a stark warning that early cost estimates provide poor input for assessing project rate of return.

United States Environmental Protection Agency (USEPA) has regulated drinking water since the 1974 Safe Drinking Water Act (SDWA). Congress directed it to achieve three conflicting goals: (i) establish stringent nationwide standards, (ii) ensure that these standards are both technologically and economically feasible, and (iii) accommodate significant differences in cost among water systems of different sizes with different water sources. USEPA chose to emphasize goal (i) at the expense of (ii) and (iii). In 1986, Congress intensified its preference for (i), was silent concerning goal (ii), and criticized USEPA for failing to achieve goal (iii). In lieu of economic feasibility, the Agency substituted “affordability,” defined as expenditures up to 2.5 % of national median household income irrespective of the benefits. This imposed deadweight losses, and substantial inequities on rural areas, low-income communities, and low-income households generally. In 1996, Congress directed USEPA to use benefit-cost analysis positively and normatively. Regulations issued since 1996 do not appear to comply, however. A review of post-1996 drinking water standards indicates that most were certified by USEPA as having benefits that justified costs, but these determinations were unsupported by the Agency’s own regulatory impact analyses. This article proposes that USEPA define by regulation that “economic feasibility” means marginal benefits exceed marginal costs for the smallest water system subject to SDWA, and that all future drinking water standards must be economically feasible. Economic efficiency would be greatly enhanced and the pervasive inequities of “affordability” greatly diminished. Unlike “affordability,” this definition is objective and compatible with lay intuition about the meaning of key regulatory terms.

We examine the net benefits of social distancing to slow the spread of COVID-19 in USA. Social distancing saves lives but imposes large costs on society due to reduced economic activity. We use epidemiological and economic forecasting to perform a rapid benefit–cost analysis of controlling the COVID-19 outbreak. Assuming that social distancing measures can substantially reduce contacts among individuals, we find net benefits of about $5.2 trillion in our benchmark case. We examine the magnitude of the critical parameters that might imply negative net benefits, including the value of statistical life and the discount rate. A key unknown factor is the speed of economic recovery with and without social distancing measures in place. A series of robustness checks also highlight the key role of the value of mortality risk reductions and discounting in the analysis and point to a need for effective economic stimulus when the outbreak has passed.

This article has three sections, each of which deals with an Executive Order. The first section, “Office of Information and Regulatory Affairs (OIRA) Past,” emphasizes the critical role that Executive Orders played in the formation of OIRA. More specifically, OIRA owes its initial existence to the establishment of a centralized regulatory review system, the Quality of Life Review, which initiated Office of Management and Budget (OMB) review of environmental regulations through the issuance of a directive from OMB. Every subsequent President expanded OMBs powers through the issuance of Executive Orders which culminated in the Iconic Executive Order 12291. The section concludes with the recommendation that a select class of Executive Orders, and OMB Directives, be designated as “Iconic” by the National Archivist in consultation with the OIRA, and then given substantial deference by incoming Administrations. The second section, “OIRA Present,” describes an Executive Order issued during the Kennedy Administration which remains in effect but was promulgated prior to the establishment of OIRA and therefore recommends that a new Executive Order be issued which gives OIRA specific authority to participate in the conduct of interagency reviews of Executive Orders. The third section, “OIRA Future,” describes an Executive Order which implements a regulatory budget (RB) and institutionalizes a mechanism for controlling the size of the administrative state. This final section of the article recommends that the aforementioned Executive Order be reviewed and modified based upon the outcome of a request for public comments, and rules with demonstrated positive net benefits should no longer be accorded an automatic entitlement for issuance as a final rule absent their inclusion in an RB.

“Uncertain futures” refers to a set of policy problems that possess some combination of the following characteristics: (i) they potentially cause irreversible changes; (ii) they are widespread, so that policy responses may make sense only on a global scale; (iii) network effects are difficult to understand and may amplify (or moderate) consequences; (iv) time horizons are long; and (v) the likelihood of catastrophic outcomes is unknown or even unknowable. These characteristics tend to make uncertain futures intractable to market solutions because property rights are not clearly defined and essential information is unavailable. These same factors also pose challenges for benefit-cost analysis (BCA) and other traditional decision analysis tools. The diverse policy decisions confronting decision-makers today demand “dynamic BCA,” analytic frameworks that incorporate uncertainties and trade-offs across policy areas, recognizing that: perceptions of risks can be uninformed, misinformed, or inaccurate; risk characterization can suffer from ambiguity; and experts’ tendency to focus on one risk at a time may blind policymakers to important trade-offs. Dynamic BCA – which recognizes trade-offs, anticipates the need to learn from experience, and encourages learning – is essential for lowering the likelihoods and mitigating the consequences of uncertain futures while encouraging economic growth, reducing fragility, and increasing resilience.

Most hospital payment systems based on diagnosis-related groups (DRGs) provide payments for newly approved technologies. In Germany, they are negotiated between individual hospitals and health insurances. The aim of our study is to assess the functioning of temporary reimbursement mechanisms. We used multilevel logistic regression to examine factors at the hospital and state levels that are associated with agreeing innovation payments. Dependent variable was whether or not a hospital had successfully negotiated innovation payments in 2013 (n = 1532). Using agreement data of the yearly budget negotiations between each German hospital and representatives of the health insurances, the study comprises all German acute hospitals and innovation payments on all diagnoses. In total, 32.9% of the hospitals successfully negotiated innovation payments in 2013. We found that the chance of receiving innovation payments increased if the hospital was located in areas with a high degree of competition and if they were large, had university status and were private for-profit entities. Our study shows an implicit self-controlled selection of hospitals receiving innovation payments. While implicitly encouraging safety of patient care, policy makers should favour a more direct and transparent process of distributing innovation payments in prospective payment systems.

In this paper we review the benefit-cost analyses (BCAs) made to support applications for authorisations under the EU’s REACH Regulation on hazardous chemicals. Experiences from over 100 cases suggest that there are a number of informational and methodological challenges to overcome in these BCAs. In particular, we find that many REACH applicants have had problems explaining the societal relevance of the regulatory impacts expected to affect them and other market actors. Adapting the framework for regulatory impact assessment proposed by Dudley et al. [(2017). Consumer’s Guide to Regulatory Impact Analysis: Ten Tips for Being an Informed Policymaker. Journal of Benefit-Cost Analysis, 8, 187–204], we discuss these impacts from a welfare economics perspective and make suggestions on how to improve current practices in BCA applied to chemicals risk management. From this discussion we then distill a number of topics that deserve more attention in applied BCAs under the REACH Regulation.

Economists understand that a fit for purpose policy regime requires a reliable general equilibrium model of the system in question and a well specified description of the objectives that the policymaker is trying to pursue. The current financial stability regime has neither and without these critical foundations the regime is fundamentally fragile and incomplete. There is no anchor on the conduct of policy, an absence in genuine accountability and, as a result, reputational risks for policy institutions.

Regulatory impact analyses (RIAs) weigh the benefits of regulations against the burdens they impose and are invaluable tools for informing decision makers. We offer 10 tips for nonspecialist policymakers and interested stakeholders who will be reading RIAs as consumers.

1. 1. Core problem: Determine whether the RIA identifies the core problem (compelling public need) the regulation is intended to address.

2. 2. Alternatives: Look for an objective, policy-neutral evaluation of the relative merits of reasonable alternatives.

3. 3. Baseline: Check whether the RIA presents a reasonable “counterfactual” against which benefits and costs are measured.

4. 4. Increments: Evaluate whether totals and averages obscure relevant distinctions and trade-offs.

5. 5. Uncertainty: Recognize that all estimates involve uncertainty, and ask what effect key assumptions, data, and models have on those estimates.

6. 6. Transparency: Look for transparency and objectivity of analytical inputs.

7. 7. Benefits: Examine how projected benefits relate to stated objectives.

8. 8. Costs: Understand what costs are included.

9. 9. Distribution: Consider how benefits and costs are distributed.

10. 10. Symmetrical treatment: Ensure that benefits and costs are presented symmetrically.

Numerous regulatory reform proposals would require federal agencies to conduct more thorough economic analysis of proposed regulations or expand the resources and influence of the Office of Information and Regulatory Affairs (OIRA), which currently reviews executive branch regulations. Such reforms are intended to improve the quality of economic analysis agencies produce when they issue major regulations. We employ newly gathered data on variation in current administrative procedures to assess the likely effects of proposed regulatory process reforms on the quality of agencies’ regulatory impact analyses (RIAs). Our results suggest that greater use of advance notices of proposed rulemakings for major regulations, advance consultation with regulated entities, use of advisory committees, and expansion of OIRA’s resources and role would improve the quality of RIAs. They also suggest pre-proposal public meetings with stakeholders are associated with lower quality analysis.

Critiques of benefit-cost analysis (BCA) are usually made on theoretical or methodological grounds; however, understanding how BCA is actually used in decision-making processes is critical if BCA is to inform policy-making. Our paper examines how the implementation of BCA within policy decision-making processes can serve to increase, rather than alleviate, controversy. This runs contrary to the standard assumption that BCA improves decision-making by providing objective data that serves as a basis for policy consensus. To frame this issue, we engage the literature on the role of science in policy decisions and the role of bureaucrats in understanding and implementing policy research. We introduce the concept of “Bureaucratic BCA” as a framework for the practical application of BCA; Bureaucratic BCA does not refer to BCA specifically conducted by bureaucrats or a lesser, technically inferior version of BCA, but rather acknowledges that BCA plays an interactive role within bureaucratic decision-making processes rather than simply serving as a sterilized information input. We show how the dynamics of BCA within the policy process can make BCA a source of controversy and waste rather than an aid to policy efficiency. In light of the Bureaucratic BCA framework, we provide recommendations as to how BCA can be implemented more productively.