Are the government’s own estimates of job losses reliable?
For decades, OMB has required EPA to estimate the costs and benefits of proposed regulation (Executive Order 12291). Experts compared EPA’s pre-regulatory cost estimates of the economic burden with what actually happened (including reduced productivity and lost jobs) when the regulations went into effect. Their conclusion? Even EPA’s (and other agencies’) own pre-regulatory estimates of economic burden are overly pessimistic of the total costs. Often, this is because they underestimate the potential that technological change, including innovation and commercialization, minimizes pollution abatement costs. Why do even EPA’s numbers overestimate the costs of regulation? There are many reasons why EPA overestimates costs. Here are a few: • Economists do not own crystal balls to project technological innovation. In the acid rain (SO2) program (the model for climate change cap-and-trade proposals), scrubbing turned out to be more efficient and more reliable than expected. Pre-regulation, an
