Better Regulatory Impact Assessment - Making Behavioural Insights Work for the Commission’s New Better Regulation Strategy

The European Commission’s (Commission) Better Regulation Strategy (BRS) is the major guideline for the Commission to assess legislation. It draws on regulatory impact assessment (RIA) via cost-benefit analysis (CBA), expert advice, and simplification in EU law-making. Yet, the practice of RIA by the Commission as well as in EU member states,1 while unavoidably incomplete, has shown avoidable shortcomings. 2 The Commission’s New Better Regulation Strategy of 2015 (NBRS)3 contains language that appears to address these shortcomings. If pursued consequentially, it would require an approach that resembles what has been called responsive behavioural regulation.4 At the same time, global initiatives frominter alia theWorld Bank emerge to include behavioural insights5 into policy analysis in the form of responsive regulation.6 This piece assesses potential models of RIA that can help to articulate the behavioural assumptions which are implied by NBRS as enshrined in the policy document “Better regulation for better results”.7 Themethodological implications of the NBRS require a significant departure from the reliance on classical CBA, which is characteristic for the previous “Better Regulation” documents submitted by the Commission and which we termOld Better Regulation Strategy (OBRS).8 By discussing the weaknesses of the OBRS, we argue that limited validity of its preferred methodology, CBA, poses core issues. Differentiating between internal (legal and scientific) and external (social) validity, we find that legal evaluation and behavioural insights need to be included in a structured manner into RIA to provide a robust methodology, which matches state of the art standards in science and societal dialogue. The NBRS could specifically open such an opportunity, if conducted in a robust way. First, the NBRS has to acknowledge that it operates in a legal environment of EU law, where some decisions are already predetermined. Generic EU law hence already contains certain requirements at normative level, which need to be taken into account when developing NBR strategies. Second, the methods applied for RIA have to ensure a degree of internal and external validity that is acceptable for regulatory purposes. In order to meet the value commitments embedded in EU law on the assessment of impacts of EU legislation and to provide internal and external validity in a structured manner, we propose to use the “homo oeconomicus institutionalis”model as a guidance for methodological design of RIA