REGULATION BY COST‐BENEFIT ANALYSIS

Executive Order 12291 requires that all US federal executive agency regulations should pass a cost‐benefit test before promulgation. The Reagan Administration's procedures for implementing the Order are described and the strengths and problems of using cost‐benefit analysis to restrain and reform regulation are examined. The article then goes on to examine the feasibility of introducing a similar cost‐benefit approach in Britain. It is concluded that, apart from the inherent practical and administrative difficulties of using cost‐benefit, its introduction would pose special problems. Radical changes would have to be made in British central administration, in judicial training and attitudes and in regulatory law if cost‐benefit testing was to be used in anything other than an ad hoc form.