Research Commentary: Comments on Draft Revisions to OMB Circulars A-4 and A-94

Paul Joskow, Christopher Knittel, Deborah Lucas, Gilbert Metcalf, John Parsons, Robert Pindyck, and Richard Schmalensee

July 2023

The Office of Information and Regulatory Affairs (OIRA) issued draft Circulars A-4 and A-94 for public comment earlier this year.  Circular A-4 is the set of guidelines governing how federal agencies undertaking any major regulatory initiative should do a benefit-cost analysis as part of their regulatory impact analysis. Circular A-94 sets out guidelines and discount rates for benefit-cost analysis.  These new draft circulars will supersede the original circulars last issued in 1992 (A-94) and 2003 (A-4).  A group of economists at MIT submitted public comments on these draft circulars.  For Circular A-4, the comments focused on three aspects of the new draft: the scope of analysis, treatment of distributional considerations, and discounting.  For Circular A-94, the comments focused on assessing the government’s cost of capital and discounting.  This research commentary provides those submitted comments.