Moneyball regulation

For those unfamiliar with the book or film, Moneyball author Michael Lewis celebrates the success of a baseball manager, Billy Beane, who works with a statistics-obsessed colleague to transform the fortunes of his team, pushing them from second-tier to the top of the league. Beane’s secret was to discard the dogmas and intuitions of old baseball scouts and be guided by hard, statistical data instead.

Until 2012, Sunstein was Administrator of the Office of Information and Regulatory Affairs in the Obama Whitehouse. Here, he tried to take a similar approach to regulation as Beane’s approach to baseball. This meant assessing the evidence on a particular rule or regulation, rather than making subjective assumptions about what would work. As Sunstein put it, ‘you need to get as quantitative as possible… if you are going to issue a rule that makes the air cleaner, or trucks a bit safer, exactly what is it going to do? Is it going to save lives? If so, how many?’ Put into practice, he says the Moneyball principle generated $91bn of benefits from improved regulation (more than 25 times the value of those generated under President Bush and six times those under President Clinton).

There are some flaws in Sunstein’s argument about a quantitative approach to regulation, not least that one of the favoured examples from his time in office – replacing a complex, ‘food pyramid’ advice on healthy eating, with the clear ‘food plate’ showing the components of a balanced diet – appears to be based on a healthy dose of intuition about what citizens are most likely to understand.

Nonetheless, Sunstein’s appeal for evidence chimes with recent developments in the UK. Earlier this month the Cabinet Office launched four new ‘What Works Centres’ covering local economic growth, ageing, early intervention and crime reduction. Drawing on the work of the National Institute for Health and Clinical Expertise, the Centres will provide evidence to every level of government about what works in practice.

Like Sunstein’s work in the Office of Information and Regulatory Affairs, there are also a range of better regulation initiatives in the UK:

• Parliamentary Counsel has adopted a simple, plain English style.
• The National Archives has improved access to up-to-date legislation through legislation.gov.uk.
• The Law Commission has a programme of special Bills for law reform, consolidation and repeals.
• And most notably the Red Tape Challenge, which has invited citizens to discuss which regulation should be removed or simplified.

It is striking though, that for all these necessary programmes, there is not a single better regulation project in the UK which focuses solely on the data-driven, statistical approach to assessing rules and regulations that Sunstein promotes. In fact, the Red Tape Challenge has been subject to the criticism that it appeals more to intuitive assumptions that cutting red tape will be good for business than objective, quantitative data about what works in practice.

The Institute has written before about the difficulty of translating abstract notions that regulation is bad into specific, effective changes in practice. A project dedicated to this latter task – a ‘What Works Centre for Regulation’ – could prove a useful addition to existing better regulation projects and might even help harness some of the savings Sunstein achieved in Washington.

The Institute for Government will be examining how legislation and regulation can be made more effective and accessible at the #goodlaw event on 16th April.