FACT SHEET: Biden-⁠Harris Administration Announces New Initiative to Advance the Frontiers of Benefit-Cost Analysis and Strengthen Government Decision Making

For government to make the best decisions, it must use analysis that keeps pace with advancements in science and economics. Today, the Biden-Harris Administration is releasing the first annual report from the Frontiers of Benefit-Cost Analysis initiative, a new, whole-of-government effort to improve policymaking by catalyzing collaboration between the Federal government and the research community. By strengthening the exchange of knowledge between Federal analysts and the research community, we can create better analytical tools, better understand and eliminate gaps in analysis, and, as a result, improve policymaking and returns to the American people. The report identifies specific areas where further research could significantly benefit government decision making by helping agencies improve analysis of the effects of their actions.

The report describes how outside researchers can engage with government agencies so that agencies can benefit from the depth of knowledge possessed by our Nation’s researchers and experts. Early engagement can help to point analysis in the right direction. The Frontiers initiative is introducing new ways for the research community to engage with agencies. For example, researchers can now utilize a new, targeted email address to share this kind of information: Frontiers@omb.eop.gov. The report also provides guidance to researchers on using and engaging on agency regulatory agendas.

The annual Frontiers report is just the first step in promoting engagement with researchers and experts. Future plans include seminars, roundtables, and workshops to highlight the latest advances from the research community.

The Frontiers initiative and report complement the broad-based effort by the Biden-Harris Administration to modernize and improve regulatory review. Last month, the Office of Management and Budget’s Office of Information and Regulatory Affairs finalized revisions to Circular A-4, and Circular A-94, government-wide guidance on regulatory analysis and project analysis, respectively. These updates will help bring analyses up-to-date with the modern best practices in economics and multidisciplinary research. The Frontiers initiative will build upon these policy updates to help ensure that Federal agencies have access to the best available analytical tools and knowledge, with applications to wildfires and extreme weather, public benefit programs, non-fatal health effects, ecosystem services, and information and transparency.

Areas Ripe for Further Research

The report identifies a range of effects where better analysis would meaningfully improve government decision making, including: wildfires and extreme weather; the effects of public benefit programs; evaluation of non-fatal health effects; the effects on ecosystem services; and the value of information and transparency.  

Wildfires and Extreme Weather

A critical role of the Federal government is to help communities prepare for and respond to natural hazards and extreme events like wildfires, floods, hurricanes, sea-level rise, droughts, earthquakes, and extreme heat and cold. As the climate changes, extreme events are increasing in frequency and intensity. Agencies are developing and implementing regulations, programs, and projects to help communities respond and adapt. Measuring the benefits and costs of efforts to address these extreme events can help agencies identify the most efficient regulatory and programmatic options. Yet analysis gaps still remain. This report identifies one of the most common challenges related to extreme events: quantifying and monetizing the benefits of Federal actions to manage these hazards. For instance, research indicates that the risk of wildfires is growing over time. This information is helpful for understanding the scale of the problem that needs to be addressed. But agencies also need to know whether a specific action they might take will actually cause a reduction in wildfire risk. It can also be difficult to quantify the health impacts of wildfires on communities and populations—including health and safety risks to fire personnel—as well as the distribution of those impacts. With additional information and analytical tools, agencies can better understand how incurring some costs up front might lead to cost savings or health improvements down the line, and also help to identify where government action can be most effective.

Effects of Public Benefit Programs

The Federal government operates many public programs that help individuals and families by providing nutritional support, housing subsidies, health insurance, and student aid programs, among other resources. Analyses of these programs sometimes focus only on the benefit payment to participants or the program’s administrative expenses, and overlook other important, real-world consequences of these programs, some of which may take years to manifest. For a person receiving such assistance, the benefits can be transformative—leading to long-term improvements in health, economic security, and productivity, as well as positive effects that extend beyond the direct program recipient, such as an improvement in the health and well-being of recipients’ children. Just as research in recent decades has helped identify the social cost of environmental pollutants like smog (e.g., PM_2.5)—measures valuable for Federal benefit-cost analyses—more comprehensive research can help to produce useful measures of the social benefits of investing in individuals and families through public benefit programs.

Non-Fatal Health Effects

Historically, analyses of Federal actions with significant health effects have focused more attention on changes in mortality risks than on changes in non-fatal health effects. Through the Frontiers initiative, agencies identified multiple areas where research community efforts and further government efforts can help improve the evaluation of these important but under-represented health outcomes. One important challenge is a lack of data. For example, while data on direct medical expenditures are often available for some non-fatal health outcomes, other significant costs of poor health—such as the cost of hiring a caregiver, treating co-occurring diseases, or risks to employment—are not as readily available. To better understand costs related to non-fatal health effects, agencies would benefit from estimates that account for these measures. Agencies would also benefit from more granular, location-specific data on the effects of environmental conditions on health outcomes such as cancer and cardiopulmonary diseases.

Ecosystem Services

Ecosystem services are contributions to human welfare from the environment or ecosystems. As described in recent draft guidance from OMB, government actions can enhance or degrade ecosystem services in ways that can be highly consequential for people’s lives and livelihoods. The Frontiers report highlights areas where agencies particularly need additional research as they work to expand the evaluation of ecosystem services in response to OMB’s guidance. These areas include: the effect of habitat designations, allocations of fishery catches, the role of soil in preventing climate change by storing carbon, the benefits people experience from recreation in natural areas and from knowing that ecosystems are well protected, and the value of ecosystems to Tribal Nations and Indigenous Peoples. Accounting for the effects of ecosystem services will give a more robust and complete view of the actual costs and benefits of a given policy or program.

Information and Transparency

An important function of the government is to provide information to its citizens, enhancing their understanding and empowering them to make better-informed decisions. Agencies need research insights into how advances can be made in three major areas: valuing accurate and transparent consumer information; valuing contract transparency; and valuing the benefits of information to the broader public. For example, how does improved transparency about potential conflicts of interest affect the advice given by financial advisors? What are the tradeoffs involved for a policy that provides extensive information on risks associated with a product versus one that sets minimum quality standards on the product? What are the benefits of improved supply-chain monitoring, like the Seafood Monitoring Program which works to prevent the sale of illegal, unreported, and unregulated fish? Agencies also expressed interest in better understanding the effects of artificial intelligence on society—a rapidly growing research area that has the potential to substantially affect agency decision making in coming years.

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Today’s report is the first step in focusing future research where it can have the most significant impact on government decision making. More comprehensive research targeted to fill data gaps will lead to more informed and responsive action and policies that improve Americans’ well-being. The Administration will continue to explore new frontiers to help agencies and the broader research community collaborate on improving the quantification and monetization of important effects of government policies—all with the goal of ensuring more transparent and effective Federal decisions.

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