The Obama Administration’s War On Particulate Emissions

Greg Ip has a piece in the Economist noting (surprise surprise) that the Obama administration’s Office of Informational and Regulatory Affairs takes a friendlier approach to environmental regulations than did the Bush administration version of OIRA.

It very useful moves beyond that observation to pinpoint specifically what the source of the difference is, namely that Obama administration’s much greater reliance on the idea that reducing the level of fine particulates in the atmosphere is beneficial. He cites as an example the important mercury regulation the administration handed down several months ago. Complying with the new rules on mercury will cause a number of the oldest and dirtiest coal-fired power plants in the country to shut down, which will drastically reduce fine particulate emissions coming from those plants. This, according to the Obama administration, will have major benefits for human welfare.

Unfortunately Ip in the piece at points seems to simply assume that departure from Bush-era practice must be a mistake: “Fully two-thirds of the benefits of economically significant final rules reviewed by OIRA in 2010 were thanks to reductions in fine particles brought about by regulations that were actually aimed at something else, according to Susan Dudley of George Washington University, who served in OIRA under George Bush.”

But what should we make of the fact that Dudley disagrees with current OIRA head Cass Sunstein about the most appriate approach? Isn’t it possible that the industry-friendly and regulation-averse Bush administration spent its time dramatically underrating the public health benefits of reduced fine particulate emissions? Asthma, for example, is not some unimportant thing. Currently over 8 percent of the US population and over 9 percent of children suffer from the disease. It kills thousands of people per year and is responsible for almost 2 million hospital-days worth of care per year. Kind of a big deal!

I’m not a doctor or a scientist, but it seems to me as an economics writer and a political pundit that there’s good public choice reason to suspect that the government will err on the side of underregulating air pollution. One reason is simply status quo bias—it’s hard to change the rules. Another reason is that the damage of air pollution tends to accrue over the long term while the monetary and GDP benefits of polluting accrue in the short term and the political cycle is heavily biased in favor of short-term considerations. So all things considered if I had to guess I’d say that what’s going on here is a change for the better. Perhaps that’s wrong, but you’d need a more detailed argument than “that’s not how we did it when George W Bush was running the country.” When he was running the country we invaded Iraq, we decided bank leverage didn’t need to be regulated, and we decided debt-financed tax cuts were a good idea in the middle of an economic expansion. Lots of crazy ideas were ruling the roost.