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Less Regulation, More Information, Better Results?

By David Henderson

Many economists, after noting that government regulations have harmful unintended consequences, advocate replacing government regulation with government-provided information. These economists see the bad consequences of having government officials make decisions for people and not allowing people to make their own decisions. At the same time, they argue, the government officials might have good information and if they simply provide that information to the public, that will improve the situation.

In the cases other economists and I discuss, a replacement of regulation with government provision of information would be an improvement. With such a shift from regulation to information provision, people could take the government’s information into account but still make their own decisions. Would it be preferable to a situation with no regulation? For it to be preferable, the government would have to provide good information and not mislead people. But does the government generally provide good information? Figuring out the answer would take years of research, but recent evidence during the COVID-19 pandemic, and some basic reasoning about government officials’ incentives, should make us hesitant to trust government information.

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