A New Way to Measure Regulations

RegData, developed by Patrick A. McLaughlin, Omar Al-Ubaydli, and the Mercatus Center at George Mason University, improves dramatically on the existing methods used to quantify regulations. Previous efforts to assess the extent of regulation in the United States have used imprecise variables such as the number of pages published in the Federal Register or the number of new rules created annually. However, not all regulations are equal in their effects on the economy or on different sectors of the economy. One page of regulatory text is often quite different from another page in content and consequence.

RegData improves upon existing metrics of regulation in three principal ways:

  1. RegData provides a novel measure that quantifies regulations based on the actual content of regulatory text. In other words, RegData examines the regulatory text itself, counting the number of binding constraints or “restrictions”—words that indicate an obligation to comply, such as “shall” or “must.” This is important because some regulatory programs can be hundreds of pages long with relatively few restrictions, while others only have a few paragraphs with a relatively high number of restrictions.

  2. RegData quantifies regulation by industry. It uses the same industry classes as the North American Industrial Classification System (NAICS), which categorizes and describes each industry in the US economy. Using industry-specific quantifications of regulation, users can examine the growth of regulation relevant to a particular industry over time or compare growth rates across industries.

    There are several potential uses of a tool that measures regulation relevant to specific industries. Both the causes and consequences of regulation are likely to differ from one industry to the next, and by quantifying regulations for all industries, individuals can test whether industry characteristics, such as dynamism, unionization, or a penchant for lobbying, are correlated with industry-specific regulation levels.

    For example, if someone wanted to know whether high unionization rates are correlated with heavy regulation, the person could compare RegData's measure of industry-specific regulation for highly unionized industries to industries with little to no unionization.

  3. *NEW* RegData 2.0 provides the user with the ability to quantify the regulation that specific federal regulators (including agencies, offices, bureaus, commissions, or administrations) have produced. For example, a user can now see how many restrictions a specific administration of the Department of Transportation (e.g., the National Highway Traffic Safety Administration) has produced in each year.