In a new paper, Jonathan Masur and Eric Posner argue that although cost-benefit analysis and originalism seem to belong to different legal worlds, they share a common political history of support from many of the same business interests. In recent years, both have gained wide acceptance across the political spectrum. But the ground may be shifting beneath them, and they now face uncertain futures.
Cost-benefit analysis (CBA) and originalism are rarely discussed together, and seem to belong to different legal worlds. CBA is an analytical method used by regulatory agencies to justify regulations such as bank capital limits, automobile safety measures, and particulate matter emission standards. Originalism is a style of interpretation that requires courts to determine the meaning of the Constitution by consulting historical texts. CBA is associated with health, safety, and environmental regulation. Originalism is typically associated with social and cultural issues such as gun control, religious freedom, and reproductive rights. The two methods are used by different institutions in different spheres of law for different purposes; what could they have in common? Nothing, or so it would seem.
Yet closer inspection reveals surprising commonalities—in terms of structure and function, on the one hand, and in historical pedigree and political economy, on the other. Both methods were developed to constrain decision-making. CBA was introduced as a mechanism for preventing agencies from issuing inefficient regulations. Originalism was first justified as a means of preventing judges from enacting their policy preferences. Over the past several decades, critics have seized upon these features, arguing that the excessive rigidity of CBA and originalism compel harmful outcomes.
Critics argue that CBA squelches regulations that might be valuable but whose benefits cannot be easily quantified; a different set of critics charge that originalism dictates that valuable laws or cherished rights must be struck down, no matter the cost. At the same time, critics also argue that the two methods are malleable and serve only to rationalize outcomes reached on other grounds. Both criticisms cannot be correct and in fact reveal a common feature of the methods: they were initially adopted to constrain government actors, but they include just enough safety valves to prevent them from leading to terrible outcomes. This explains some of their appeal and staying power.
Both methods are also technocratic. CBA draws heavily on the expertise of economists, while originalism calls on the talents of historians, as a matter of logic and increasingly of practice, though lawyer-historians have so far played a greater role in litigation than historians who have been trained to professional standards. Both methods rely heavily on these communities of like-minded experts to police the rules of the method in order to maintain the discipline while allowing it to be updated in response to developments in understanding.
CBA and originalism are what we will call mid-level legal methods. Mid-level legal methods are neither normative commitments nor legal doctrines, but recurrently used methodologies that are applied to multiple substantive areas of law. Mid-level methods are distinct from legal doctrines, such as the contract doctrine of consideration or the First Amendment’s content neutrality rules. Doctrines are legal rules, while midlevel methods operate on legal rules—they are meta-rules for limiting the content of legal rules. Accordingly, they are the sorts of principles that courts are likely to draw upon when they adjust or invent legal rules. What is peculiar and interesting about these two mid-level methods is that, despite the fact that they cover such divergent domains, they have developed similar structures to fill similar roles.
How did these two methods with such similar structural and functional characteristics arise? One possible view is that they are both happy discoveries that took place roughly the same time but are otherwise unrelated. We argue otherwise, based on another, even more surprising, common feature of the two methods: their shared political history. Both methods originated in the 1970s. Both were controversial from the start. But both methods have been propelled forward by significant financial support from an overlapping web of business groups and intellectual support from academic supporters associated with pro-market trends in intellectual and political circles in the 1970s and 1980s. In particular, both received support from pro-business groups affiliated with the Koch network, the United States Chamber of Commerce, and related entities. Both methods were understood (and intended) to protect business interests. Accordingly, both methods were originally backed largely by conservatives and associated with the conservative legal movement.
But even that has shifted over time, and roughly contemporaneously. CBA acquired a large number of moderate and liberal backers in government and academia between the 1990s and the first decade of the 2000s. Presidents Clinton, Obama, and Biden were all committed to CBA and staffed their regulatory offices with left-leaning academics who supported the method. These defenders of CBA argued that it was a valuable mechanism for sorting good regulations and projects from bad, despite its conservative ideological origins. Originalism took longer to gain support from the left, and it has never been more than begrudging. But there are now left-leaning academics and liberal Supreme Court justices who identify themselves as originalists, employ originalist methodologies, or make rhetorical accommodations to originalism.
One might think that we are moving steadily toward ever greater acceptance of CBA and originalism across the political spectrum. Yet as Yogi Berra didn’t say, it’s tough to extrapolate, especially about the future. Both methods have come under pressure over the last few years and face an uncertain future. CBA and originalism, as mid-level methods, depend on three things: institutional support from government agents who use them, rough consistency with public opinion, and the support of a critical mass of elected officials. Originalism and CBA achieved practical influence because they attracted business support and were useful to government officials, but their support by the public and Congress has been limited and erratic. Today, shifting political coalitions and changes in public opinion have revealed the limits of both methods and point to their possible erosion or even demise.
Originalism’s institutional support in the Supreme Court is relatively strong for now. But originalism’s capacity to achieve desired legal change has started to wane as ideological partisans seek gains that originalism cannot deliver—particularly, in the area of religious rights and certain restrictions on government power. Driven by these goals, originalist judges have voted against business interests in a set of prominent cases. Without business support to finance media campaigns in favor of appointments of originalist judges, originalism’s days are numbered. Trump, and no doubt his Republican successors, have little incentive to nominate judges with jurisprudential commitments that threaten their financial supporters.
CBA’s institutional support in the executive branch has begun to change as well. During the Obama administration, CBA was used to justify extensive regulations, especially relating to climate change. That hardly sat well with businesses, whose financial interests dictate opposition to regulation that imposes costs on them regardless of whether it produces benefits for others. It is not likely a coincidence that in his first term, President Trump sought to evade CBA whenever it stood in the way of deregulation—for example, by requiring agencies to withdraw two regulations whenever they issued a new one, a ceiling that was unrelated to costs and benefits. President Biden undertook significant revisions to Circular A-4—the key guidance document for agency CBAs—mainly for the purpose of allowing regulations that benefited lower-income people. This was not the first time a president had revised Circular A-4. But it is the first time that the revisions were opposed by every past president of the Society for Benefit-Cost Analysis, an indication that Biden’s approach to CBA may have strayed from traditional conceptions of how the method should operate. Also, CBA’s support in the judiciary has only ever been moderate.
Meanwhile, public opinion has gyrated in ways that are in tension with the intellectual commitments of both originalism and CBA. Populist impulses reject the technocracy that underlies both methods—posing novel dangers for both of them.
Authors’ Disclosures: the authors report no conflicts of interest. You can read our disclosure policy here.
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