Sep. 23, 2016

How Effective Are Federally Mandated Information Disclosures?

Professor Randall Lutter and co-author Arthur Fraas examine the issue of federally mandated information disclosures in a new article in the Journal of Benefit-Cost Analysis. They examine recent major U.S. regulations issued between 2008 and 2013 to identify disclosure mandates and look for quantitative assessments of their effectiveness in improving comprehension.

According to the authors, government mandates to disclose information are a standard response to problems of asymmetric information. They also reviewed the retrospective regulatory review reports of four federal agencies – prepared pursuant to Executive Orders 13563 and 13579 – for analyses of existing mandates. Lutter and Fraas find that although mandated disclosures underpin a number of major federal regulatory initiatives, agencies infrequently issue such mandates based on scientifically valid, controlled studies of the improvements in comprehension from such disclosure.

The authors conduct four case studies drawn from the relatively few instances where federal agencies have evaluated improvements in comprehension, to identify current best practices. In conclusion they recommend reforms to improve federally mandated information disclosure.

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Professor of Public Policy
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