Rules of Analysis
The procedural perspective has evolved into a broader effort to force "comprehensive rationality" in administrative decisionmaking. This "analytic imperative," as Colin Diver describes it, is embodied in a combination of executive orders and statutes mandating that public agencies analyze the economic impact of proposed standards. There are no similar rules in the private sector. Cost-benefit analysis is almost universally avoided. Leland Johnson of the RAND Corporation has identified this as a major shortcoming of private standards-setting. In short, there appear to be significant differences in the rules of analysis governing standards-setting in the public and private sectors.
Beginning with outward appearances, systematic economic analysis seems to pervade public standards-setting and elude private efforts. The CPSC prepared preliminary and final economic impact statements in both cases, quantifying costs and describing possible benefits. The FAA's full-blown economic analysis, comprising the bulk of the Federal Register notice announcing the proposed rule, quantified costs and benefits in a detailed fashion. OSHA contracted for two risk-benefit anal-
yses of the grain elevator rule, with the second addressing criticisms of the first.
By contrast, private standards-setting appears much less structured and systematic. A member of the NFPA committee on chimneys and venting—a man with a doctorate in physics, widely acknowledged to be an expert on woodstoves—recalls his initial shock at the "casual and off-handed way in which many decisions are made." Decisions made at the NFPA committee meetings on grain elevators in 1985 were similarly informal, often based on anecdotes, if on any information at all. The very notion of estimating overall benefits or costs, let alone explicitly trading them off against one another, is opposed by many in the private sector. "I don't know of any time that we have consciously gotten into cost-benefit analysis," comments a UL vice president. An NFPA executive committee has spent seven years considering the appropriateness of cost-benefit analysis. Many members share the feeling expressed at the organization's 1985 annual meeting that "cost-benefit analysis is not relevant to the actions of NFPA."
Of course, decisions packaged as cost-beneficial do not necessarily embody the concept of comprehensive rationality. Agency subterfuge is one reason. Procedural requirements can spur defensive tactics instead of substantive changes. For example, many agencies faced with the analytical requirements of environmental impact statements successfully repackaged their decisions without changing the outcome. The same phenomenon is likely when cost-benefit analysis is mandated by statute, regulation, or executive order. What Stephen Breyer is quick to observe about public standards-setting is equally true of private efforts: the process "as it might exist in the world of the rational policy planner" almost never happens in reality.
In none of the public sector case studies did the economic analysis, so prominent in the official record, appear to shape the content of the standard. The people "downstairs" write the rules at the FAA; the people "upstairs" do the cost-benefit analysis. The tasks are done more or less at the same time, and no one interviewed on either floor thinks that the cost-benefit analysis affects the substance of the rule. (Of course, it might help justify what ends up being proposed, and it certainly delays the process to some extent.) Many OSHA officials are similarly skeptical of systematic attempts to quantify costs or benefits. They view such efforts largely as methods for justification, not decisionmaking. The risk-benefit analyses funded by OSHA were done after the grain elevator standard was written. In short, analyzing public and
private standards-setting in terms of their rules of analysis is an invitation to frustration. On the public side, it is clear that the rules do not tell the whole story, while on the private side it is not even clear what the rules are. The ideal of comprehensive rationality provides little basis for evaluating or comparing standards-setting systems in a manner that illuminates the observations in chapters 7 and 8.