08 January, 2009

An Inspired Choice

Obama picks Cass Sunstein to be the head of OIRA, the Office of Information and Regulatory Affairs.

I like this pick for a few reasons. First, Sunstein is firmly committed to cost-benefit analysis. Here is his paper on "The Cost-Benefit State". I think he'll be open to things like experimentation in the regulatory realm. Second, his intellectual ties will be a lot stronger than his institutional ones, which will be important when it comes to canning crumby rules. Third, his recent book with Richard Thaler, Nudge, is a major advance in regulatory thought. I haven't actually read it, but the point is that people have lots of biases in how they think and very light-handed regulation can push people to much better outcomes. The famous example of this is requiring businesses to have people opt out of 401k plans instead of opt in to them. Same difference to a rational actor, but it greatly increases 401k participation.

ADDENDUM: And the guy is boning married to Samantha Power!

UPDATE: Ezra Klein seems a bit confused about Sunstein's views. Or something:

Then came George W. Bush, who appointed the noxious John Graham to OIRA. Graham was famous for his cost-benefit risk analysis techniques, which had spurred him to declare regulations against PCBs, saccharine, and nuclear power evidence of society’s “flustered hypochondria.”
But Sunstein is for cost-benefit analysis. In fact, he wrote a paper (and a book) called "The Cost-Benefit State" where he lays out in detail why regulation should be done on a cost-benefit basis.

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