Cost-benefit analysis (CBA) simply put is an economic theory which requires rationalactor to weigh costs against benefits in policy and decision making. It sits squarely within the regulatory scholarship of an economicanalysis of law, a full inquiry requiring the unbundling of the foundation of economic approach to law, whichessential addresses four related questions:

1. Whatis economic efficiency; that is what does it mean to say resourcesare allocated in aneconomically efficient manner?
2. Doesthe principle of efficiency enjoyexplanatory merit; for example, can law be subsumed under an economic theory of legislation?
3. How should law be formulated to promote efficiency?
4. Should law pursue economic efficiency; that is, to what extent is efficiency a desirable legal value?

These are questions that cannot all be answered here. But we will say this much. The first implicates the analytical framework for law and economics. The second relates to how welfare economics provides explicable template for understanding diverse body of existing law.3 The third is technical in nature. The fourth concerns welfare economics as a normative discipline. This is the much a paper of this sort constrained by space can take.

CBA as rational for decision making in the public domain calls for an analysis of two distinct but related questions: whether there is justification for regulation and if so, what things should weigh in the mind of the decision maker in metrically measuring benefits against costs. These oughts to be matters of concern to all in view of the increasing ubiquitous and sometimes chaotic nature of today’s regulatory state. This is to be expected. We live in the laws empire. Government is gradually turning modern societies to regulatory states. There is virtually no part of our lives unregulated by the state. The state regulates education, food, movement, businesses etc. It regulates who can vote, how to vote, what we eat, listen to or hear from the radio or television, and many others. It is not uncommon to hear individuals, groups and businesses that rail under legislation and regulations which threaten their existence and concerns question the ambits of the powers of the state. It is therefore important to legally analysis the range of activities covered in the modern state bygrowing legislation and regulation, especially in the context of whether the regulatory state is effectively mitigating the economic and non-economic problems regulation addresses.

Regulatory scholarship seeks to reduce law to policy, and policy to CBA of a kind that counts as values only items for which a market exist. CBA is a wake-up call for analysing legislation and governance within the framework of regulatory scholarship and methodology. Why? Because there is increasing need to make sense of present seeming chaotic state of regulation and government programmes. What is more, there is need to address the question whether legislation from the regulatory state is mitigating the economic and social problems they address. For example, in environmental matters, an accounting for costs-benefits is particularly important“ in an age of limited resources available to deal with grave environmental problems, where too much wasteful expenditure devoted to one problem may mean considerably fewer resources available to deal effectively with other(perhaps more serious) problems.”

This paper will be limited in scope by certain fundamentals. One, the word „legislation‟ in this paper will describe both law enacted by the legislature and regulations made thereunder by government agencies. So our discussion on CBA would generally refer to both even though there are substance and normative differences between both. Two, CBA in connection with legislation as used in this paper primarily will refer to a monetized version which posits that cost and benefits of government projects are reducible to monetary sums and aggregated, with total money costs subtracted from total moneybenefit, and then assigned a net money amount,negative or positive.

CBA as benchmark for legislation became popular in the wake of public choice scholarship which describes regulatory politics as composedof market-like transactions between those who demand regulation (the buyers) and those who supply it (the sellers).9 This type of analysis became widely used in 1981 with the groundbreaking Executive Order 12291 by President Ronald Reagan of the UnitedStates which imposed a cost-benefit test on regulations. The executive order enjoined all federal agencies not to undertake any regulatory action „unless the potential benefits to society for the regulation outweigh the potential costs to society. ‟10 Years after, American Presidents continue to order regulatory agencies, to the extent permitted by law, to implement regulatory standards based on cost-benefit balancing.