Wednesday, January 31, 2018

Opposing the FCC's Use of Economics and Analytics Raises a Red Flag

Yesterday, the FCC voted to establish the Office of Economics and Analytics, which will help ensure that economic analysis is deeply and consistently incorporated as part of the agency’s regular operations. The decision was a party-line vote with Commissioners Clyburn and Rosenworcel dissenting, but why would any Commissioner vote against the FCC using more economics and analytics?
In a September 2017 blog, I said that opposing a cost-benefit analysis for proposed regulations is a red flag:
It is important that the FCC perform this cost-benefit analysis, because agencies, independent or not, should analyze how new rules will impact innovation, investment, job creation, and economic activity. It is reasonable to question the methodology that an agency uses when assessing the costs and benefits of a regulation. However, if an interested party offers only criticism of an agency proposal to conduct a regulatory CBA, this is likely a signal that the interested party fears that the costs will outweigh the benefits, invalidating its policy position.
I think the same rationale applies for anyone who opposes the FCC’s action to create the Office of Economics and Analytics. It will be important for consumers, businesses, and policymakers to question the methodology and results that this office will produce in the future, and I fully expect all Commissioners, at some point, to disagree with a methodology used by the office. However, opposing the implementation of additional uses of economics, analytics, and data science at the FCC raises a red flag.