Agencies Should Give Analysts More Independence
In March, President Trump signed Executive Order 13781 which gives the directors of executive branch agencies 180 days to create plans to reorganize themselves “in order to improve the efficiency, effectiveness, and accountability” of each agency. Agencies are now about a third of the way to the deadline.
The reorganization planning offers an opportunity for agencies to consider options for improving the quality of their regulatory analysis. A study conducted by the Mercatus Center at George Mason University found that the quality of analysis from federal agencies is on average very low and highly variable. Analysis should substantively inform agencies’ policy decisions, but if the quality of the analysis is lacking or inconsistent, it cannot effectively inform these decisions.
How can agencies reorganize in a way that could increase the quality of their analysis? The academic literature reveals that bureaucratic structure determines what information gets to the decision maker, which inevitably affects agencies’ policy decisions. But the literature is sparse on the intersection between agency structure and the role analysis plays in decisions.
In a recently published article in the Review of Policy Research, Professor Stuart Shapiro uncovers a connection between the organization of an agency and the effectiveness of regulatory analysis to govern agency decisions.
For his study, Shapiro attempts to bridge this gap in the research by interviewing 32 high-level analysts on their experiences within a variety of agencies. The conversations focused on the autonomy of the analysts and how they conducted either environmental impact analysis (EIA) or benefit-cost analysis (BCA).
The economists, who conduct benefit-cost analyses, emphasized the importance of independence for the legitimacy of their analysis. Independence allows economists to voice honest criticisms of a proposed policy or regulation without jeopardizing their own careers. Separating the analytical office from the program office can achieve this.
One disadvantage of independence cited by the interviewees is that they may be left out of the early stages of rulemaking, when many of the key decisions have already been made. They all agreed that they would have a greater impact if their analysis was considered earlier in the process. While it is important for regulatory analysis to be used early in the process, many of the economists agreed that the ability to provide an independent assessment of a policy outweighs the risk of decision makers using the analysis later in the process.
Like the economists, the environmental impact assessors also highlighted the importance of independence in their interviews. In agencies where decision-making authority is pushed into regional or local offices, analysts felt they were able to have a strong influence on decisions. For higher profile policies, however, decisions tend to be made in national offices, in which the EIAs conducted by the analysts are often used to justify decisions that are already made rather than substantively influence the decisions themselves.
In the interviews, the environmental impact assessors emphasized two factors that were not discussed by the economists doing BCAs. The first was organizational culture, which can have a significant impact on the influence of environmental analysis on decisions. For example, analysts at the Forest Service described the agency as having a culture centered on planning, in which EIAs are taken very seriously. In contrast, an analyst in the military explained that analysis tends to be “pigeonholed” rather than truly integrated into the decision making process.
Another difference is that environmental impact assessors often highlighted the role of contractors. The same issues of independence arise for contractors. If the product of a contractor is fed into an office with a preference for a particular alternative, rather than fed into a separate analytical office, it may not make much of a difference in the decision-making process.
As agencies determine how to comply with E.O. 13781, they need to consider the impact of the independence of their analysts on the quality of regulatory analysis. And don’t just take the analysts word for it. A Mercatus Center study shows that regulatory analysis tends to be of higher quality when economic analysts are independent from the program office that writes the regulation.
The chairman of the Federal Communications Commission (FCC), Ajit Pai, has already announced his intention to establish the Office of Economics and Data, an independent office that would house the agency’s economists and data analysts. Other agencies should consider using the FCC as a model and reorganize themselves in a way that enhances the independence of their analysts, and in turn, increases the quality of their analysis. This could be a great first step for agencies to begin to become more efficient, effective, and accountable.
