This NY Times Room for Debate managed to exclude the economists from participating in a debate on the future of the EPA. When I skimmed the pieces, nobody mentioned the efficiency criteria. What are the benefits of EPA regulation? What are the costs of such regulation? One debater implictly assumed that current air pollution levels would revert back to nasty 1960s levels. How does he know this? Would new cars be as dirty as 1960s cars? Would dirty industry move back to the cities and use their 1960s technology? Has exogenous technological advance taken place so that cars, power plants and industry would be cleaner in the absence of regulation? I give the EPA a lot of credit for “green city” progress but we have to quantify stuff here.
For an example of research conducted by an economist to measure the benefits of regulation, please take a look at Michael Greenstone’s work. Credible work on the cost of regulation is tough to do because firms have an incentive to overstate the cost of compliance and we have trouble predicting what new firms will enter the market if new regulations are enacted. There are many papers on the unintended consequences of regulation. Here is an example by Randy Becker and Vern Henderson.
A major reason that I support EPA action is that as we grow richer, we desire less risk in our life and we want to be healthier and happier. “Green Cities” contribute to all three of these goals. Would you want to live in Pittsburgh in 2011 or in 1951? The EPA has also contributed to social justice goals. Have you read my paper on this topic?