The views presented in On Balance are those of the authors and do not represent the views of the Society, its Board, or its members. 

This post is part of a series on President Trump’s deregulatory record and what we might expect in the new administration.

 Benefit-cost analysis has been part of the U.S. regulatory development process for over 40 years. The historic record, when coupled with recent actions, raises questions about its continued role ‒ in particular whether the focus will shift increasingly to considering costs without comparison to benefits.

Background and Context

Textbooks describe the goal of benefit-cost analysis as assessing economic efficiency, i.e., estimating the net benefits of policies to determine how to best allocate resources so as to maximize social welfare. In practice, benefit-cost analysis can be better described as a voyage of discovery, promoting systematic exploration of the evidence on policy impacts. We generally lack the data, time, and resources necessary to quantify and value all important impacts or to investigate all feasible policy options, limiting the extent to which the analysis is able to identify the most cost-beneficial approach. Yet if well-conducted, benefit-cost analysis uncovers impacts that might be otherwise unanticipated, synthesizing evidence from multiple sources and investigating the implications of uncertainty. It identifies the direct costs likely to be borne by organizations or individuals tasked with implementing the policy, as well as the types and magnitudes of the resulting benefits. This information in turn is useful in determining who might support or oppose a policy, as well as whether and how a policy could be redesigned to have more desirable effects. What is most important is not the end result, rather it is what we learn along the way.

The importance of this journey is reflected in U.S. government requirements for benefit-cost analysis of major regulations, first codified in President Reagan’s 1981 Executive Order (EO)12991, “Federal Regulation,” then revised in President Clinton’s 1993 EO12866, “Regulatory Planning and Review” ‒ which remains in place today with some modifications. Perhaps most significantly, in EO14215, “Ensuring Accountability for All Agencies,” President Trump expanded the focus of EO 12866 to include regulatory agencies that historically were considered independent from White House oversight.

Given that these requirements have persisted through Democratic and Republican administrations for over 40 years, many observers have noted that U.S. regulatory benefit-cost analysis “is here to stay.” However, both historical experience and recent events suggest that this might be overly optimistic. Although EO 12866 has been in place since 1993, it is not clear if it has teeth. And the extent to which regulatory benefit-cost analysis is here, and is here to stay, depends on how we define these phrases.

EO 12866 notes that “[i]n deciding whether and how to regulate, agencies should assess all costs and benefits of available regulatory alternatives, including the alternative of not regulating”...“[f]urther, in choosing among alternative regulatory approaches, agencies should select those approaches that maximize net benefits,” defined to include both quantified and non-quantified effects, “unless a statute requires another regulatory approach.”

However, the EO requires formal assessment of regulatory alternatives only for economically significant regulatory actions, which are those likely to have an annual effect on the economy of $100 million or more (in total costs, total benefits, or total transfers), or material adverse effects. Although regulations meeting or exceeding this threshold are those with the most substantial impacts, adherence to the stated goal of maximizing net benefits is not necessarily assessed for the vast majority of regulations.

The Historical Record

Since1997, the U.S. Office of Management and Budget (OMB), which is responsible for implementing related requirements, has issued reports to Congress on the costs and benefits of federal regulations. The most recent report was issued in early2025 and covers the 2022-2023 Federal fiscal year (FY 2023). These reports identify the major rules reviewed by OMB over each preceding year and the fraction for which both costs and benefits were quantified and monetized. Although the approach and content of these reports varies, they count as major rules those designated as “economically significant” under EO 12866, as well as those designated as “major” under theCongressional Review Act and those that meet the analytic threshold under the Unfunded Mandates Reform Act. Each of these authorities generally applies a threshold of $100 million or more to identify these rules, but how the threshold is defined and what other factors are considered varies.

The counts typically exclude rules that transfer funds from one group to another, under the rationale that these transfers are a cost to the payer and a benefit to the recipient with a net effect of zero – such as many taxes, fees, and subsidies. The counts also exclude analyses of major rules issued by independent regulatory agencies, which historically were not subject to OMB review but are discussed separately in these reports.

Comparing the results across reports is complicated by changes in reporting practices over time. However, the reports suggest that few regulations are defined as major. While recent reports do not include estimates of the total number of final rules issued in a given year, the FY 2004 through FY 2009 reports suggest that the annual total ranged from about 3,500 to 4,000 rules. In contrast, between FY 1997 and 2023, the subset of these rules that OMB defines as major ranged from six to 75, averaging about 30 per year. Of this total, only about half were accompanied by estimates of both costs and benefits; this fraction has cycled up and down over the years. These counts do not include the analyses included in these reports that were conducted by independent agencies, nor do they include the analyses that agencies conduct for non-major rules.

One might expect that over time the available data and methods would improve, increasing the ability to conduct these analyses and hence the fraction of major rules for which they are completed. However, the lack of a continuous upward trend suggests that many factors are at play. While focusing solely on these counts says relatively little about the importance of the regulations assessed and their impacts, it suggests that benefit-cost analysis of major rules may not be as pervasive as implied by the relative permanence of EO 12866.

The reports discuss factors that limit quantification and monetization, which generally relate to gaps in the available data and other analytic challenges, and more often affect the estimation of benefits than costs. Many of these challenges could be resolved if agencies received more funding and had more time to conduct these analyses. The “Frontiers” reports published by the Biden Administration in 2023 and 2024 identify many areas where a longer term program of independent academic research is also needed.

Recent Deregulatory Initiatives

In his first term, President Trump issued EO13771, “Reducing Regulation and Controlling Regulatory Costs” in 2017, which required that two regulations be eliminated for each one new regulation promulgated, and established a cap on regulatory costs that decreased over time. OMB subsequently issued detailed guidance inMemorandum 17-21 that addressed the analyses required as well as other issues. Not surprisingly, the executive order was withdrawn when the Biden Administration took office in 2021.

Trump recently issued a more ambitious version of this executive order, as EO14192, “Unleashing Prosperity through Regulation.” That executive order requires that 10 regulations be eliminated for each new regulation promulgated, and establishes a more stringent cap. Related guidance was issued inMemorandum 25-20. 

Under both the 2017 and the 2025 executive orders, a range of regulatory and nonregulatory actions may be considered, beyond the major regulations covered by the benefit-cost analysis requirements in EO 12866. Thus although the EO 12866 requirements persist and agencies are encouraged to consider benefits as well as costs as part of this process, EO 12866 applies to only a subset of the regulations affected. More importantly, as discussed earlier, historically both benefits and costs have been quantified and monetized for only half of these regulations on average. Given the focus of the current administration on reducing costs, it seems reasonable to expect that the assessment of benefits may further decrease, especially as the staffing and budgets of regulatory agencies are significantly reduced.

Future Prognosis

Is the glass half-empty or half-full? Perhaps an optimist would take great pleasure in knowing that roughly half of all major regulations have been accompanied by estimates of both benefits and costs, given that the impacts of these regulations are substantial and these analyses are complex and challenging to conduct. A pessimist might be more concerned about the other half, especially since the current focus on deregulation and regulatory costs is likely to provide an incentive to pay less attention to benefits. These challenges are likely to affect the analyses conducted by the independent agencies as well, which are now subject to the EO 12866 requirements. The substantial cuts in agency staffing and funding now underway will further exacerbate the difficulties inherent in conducting these analyses.

Given that the continued existence of EO 12866 suggests that there is value in assessing regulatory benefits and costs, what can be done to encourage more analysis? Adequate staffing and funding are essential. However, the extent to which these analyses are conducted has been limited even under administrations that are more supportive of regulation. Developing a better understanding of the factors that encourage or inhibit the conduct of these analyses would be useful. The 2023 and 2024 “Frontiers” reports identify areas where more academic research is needed, but other factors – related to budgets, staffing, litigation, and politics – are also at play. We need to determine how to best address these challenges. The Society for Benefit-Cost Analysis and its members have an important role to play.

Lisa A. Robinson is a Senior Research Scientist, Deputy Director of the Center for Health Decision Science, and core faculty member of the Center for Climate, Health, and the Global Environment at the Harvard T.H. Chan School of Public Health, where she is also affiliated with the Center for Risk Analysis and Department of Environmental Health. She is a Fellow of the Society for Benefit-Cost Analysis and served as its President in 2014, and is a member of the Journal of Benefit-Cost Analysis Editorial Board.