The cost of cost/benefit analysis

Cost-benefit "analyses" suffer two weaknesses

CFTC Commissioner Scott O'Malia may be right to want external evaluation of the cost-benefit effects of the agency's rulemakings; but the Office of Management and Budget?

On the "management" side, this Office brought us Solyndra which is not even its biggest stumble. On the "budget" side, if our nation's largest debt ever is a good thing, OMB excels.

I would rather put the rules on TV's "The Price is Right" or commission an auction house to sell the rules.

The truth is that cost-benefit "analyses" suffer two weaknesses. First, as to costs, we must remember that "figures don't lie but liars can figure." As for benefits, they are in the eye of the beholder. Does protecting customers against another MF Global (priceless to them) trump removing customer funds from FCM control (anathema to the latter)?

Suppose that having children were governed by a cost-benefit rule. The economic costs dwarf the economic benefits. But the personal joy trumps any economic costs (as a father of six, I bear witness).

Maybe we should scrap the cost-benefit bogeyman and simply do what is right. Sure, we will be wrong sometimes but following our heart usually works.

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