October 23, 2019

In conversation with Patrick McLaughlin, Ph.D.

Patrick McLaughlin is the Director of Policy Analytics and a Senior Research Fellow at the Mercatus Center at George Mason University.

 

Tell us a little about your background. How did you get to Mercatus and why did you start RegData?

My interest in regulation started when I was completing my PhD at Clemson University. I was studying environmental economics and quickly realized that regulations were the driving force behind a lot of my analysis. I became interested in developing a better way to analyze regulation and its impacts, which led me to accept a position at the Mercatus Center as a regulatory economist.

How did you move from being a regulatory economist to starting RegData at Mercatus?

Before starting RegData, I joined the Federal Railroad Administration as an economist, where I conducted cost-benefit analyses on proposed rulemakings. One of the first things we did at the agency was to scan the text of rules to look for obligatory or prohibitory phrases like “shall” or “must.” These words usually indicate some sort of action that is required of stakeholders and is a clue to the cost and benefit of a rule.

So this scanning of regulatory text ultimately led to RegData?

Exactly. RegData uses a number of variables to analyze regulations. It detects prohibitions and obligations (shall, must, may not, prohibit) in the text of regulations to determine the restrictiveness of the regulations. RegData also determines what industries are impacted by a regulation, what government agency issued the regulation, and the date it was effective.

Regulators should ask, “What is the problem we are trying to solve?”

Patrick McLaughlin, Ph.D.

Senior Research Fellow at the Mercatus Center

Right now you scan the text of regulations. Are there other kinds of data you wish were available to analyze?

There are plenty of other documents beyond regulation that are considered policies and completely unquantified at present. Guidance documents are one example. Beyond better data availability, I wish that there were better labels for policies. For example, documents should identify what type of policy it is (guidance document, etc) and what industries and occupations will be impacted by a rule using NAICS and SOC codes.

What would you recommend to a government agency that wants to improve cost-benefit analyses of regulations?

Too often regulators conduct cost-benefit analyses after the regulation is written. It is a much better practice to weigh the pros and cons of different regulatory approaches before committing words to paper.

Regulators should ask, “What is the problem we are trying to solve?”. From there, regulators can identify all of the possible solutions, evaluate their benefits and costs, and then draft the rulemaking.

Sometimes, federal agencies will issue Advanced Notices of Proposed Rulemakings to solicit feedback on regulatory alternatives before issuing a proposed rule for this purpose. Considering regulatory alternatives is the key to good analysis.

If you could wave a magic wand and make one change to the regulatory system today, what would it be?

I wish governments would adopt regulatory budgets, which puts a quota on how much regulators regulate. Whether an agency uses number of regulations, restrictiveness, regulatory costs or another metric isn’t that important to me. What is important is that a budget would change the incentives for regulators. Regulators would have to operate like a household or a business, and choose the best actions to take. When operating under a budget, you tend to allocate your energy and resources to the things that are the most important (or highest value, in economics terms). I’d like to see regulators operate the same way.

Why are you excited about Esper?

We need innovation from the private sector that enables us to deal with unstructured regulatory data to change how regulations are made. Esper is making the world a better place by tackling this challenge, improving how regulations are made and measured within government.