The Limits of Quantification

The difficulty of quantifying benefits and costs is a recurrent one in both public policy and ordinary life. Much of the time, we cannot quantify the benefits of potential courses of action, or the costs, or both, and we must nonetheless decide whether and how to proceed. Under existing executive or...

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Bibliographic Details
Published in:California law review 2014-12, Vol.102 (6), p.1369-1421
Main Author: Sunstein, Cass R.
Format: Article
Language:English
Subjects:
Administrative agencies
Break-even analysis
Breakeven analysis
Cost analysis
Cost benefit analysis
Cost estimates
Dignity
Disabilities
Economic benefits
Fairness
Financial risk
Policy making
Prisons
Public policy
Public policy (Law)
Public welfare
Quantification
Regulatory agencies
Studies
The Brennan Center Jorde Symposium
United States. Department of Justice
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Summary:The difficulty of quantifying benefits and costs is a recurrent one in both public policy and ordinary life. Much of the time, we cannot quantify the benefits of potential courses of action, or the costs, or both, and we must nonetheless decide whether and how to proceed. Under existing executive orders, agencies are generally required to quantify both benefits and costs, and (to the extent permitted by law) to show that the former justify the latter. But agencies are also permitted to consider factors that are difficult or impossible to quantify, such as human dignity and fairness, and also to consider factors that are not quantifiable because of the limits of existing knowledge. When quantification is impossible, agencies should engage in "breakeven analysis," by which they explore how high the nonquantifiable benefits would have to be in order for the benefits to justify the costs. Breakeven analysis can be used and potentially disciplined in three different ways. (1) Sometimes agencies are able to identify lower or upper bounds, either through point estimates or through an assessment of expected value. (2) Agencies can often make progress by exploring comparison cases in which relevant values have already been assigned (such as for a statistical life). (3) When agencies cannot identify lower or upper bounds, and when helpful comparisons are unavailable, breakeven analysis requires agencies to identify what information is missing and to specify the conditions under which benefits would justify costs ("conditional justification"). In admittedly rare cases, regulators, no less than individuals, might have to "pick" or instead to "opt."
ISSN:0008-1221
1942-6542