American activity Forum (AAF) research study finds that 36 regulation issued during the Obama management will increase consumer prices by much more than $11,000. From greater priced vehicles, pricier household goods, to an ext expensive food, the cumulative result of regulation has actually profound effects for consumers and the more comprehensive economy.

You are watching: Why do government regulations lead to higher prices for consumers


AAF the evaluation all current “economically significant” regulation (rules through an annual impact on the economy of better than $100 million) to determine whether the agency’s regulatory affect analyses concluded that the regulation would certainly raise prices. Although much more than 50 rules established that the regulation would impact consumers, AAF found only 36 the quantified those impacts.

For example, the environmental Protection agency (EPA) and the nationwide Highway traffic Safety administration (NHTSA) identify that customer prices will rise from recent car efficiency standards. In just one the the earlier rules, for version Year 2011 vehicles, NHTSA admitted passenger cars and also light truck prices would increase by $91.

AAF recorded any kind of instance that an firm quantifying customer price increases and also then split these increases into six areas:

Vehicles: $9,150Household customer Products: $1,639Mortgage: $362 (annual)Energy: $135 (annual)Health Care: $108 (annual)Food: $14 (annual)

From these six areas, AAF estimated the increased expense a consumer would pay due to the fact that of the regulation. For some regulations, analyses simply listed the price increase. Because that others, specific energy performance standards, AAF had to compare the average set up price of new units come the baseline, pre-regulation cost. In instances where a regulation controlled several different product classes, AAF average these cost increases. Sofie Miller’s job-related at the GW Regulatory researches Center likewise supplemented the study on enhancing product prices.



Consumer Products

This course had the largest variety of covered products: indigenous dishwashers ($44 increase), to apparel washers ($18 increase) and refrigerators ($83 increase), there are few electronic household devices that have actually not been regulated recently. The management has finalized much more than a dozen “economically significant” room of energy regulations during the past 5 years. Plenty of of these procedures admit consumers will certainly pay greater prices, but if purchasers keep goods for a specific “payback period,” lower energy prices will result in net gains.

Combined, regulation will increase the expense of consumer goods by as much as $1,600. Listed below are the more notable items the consumers deserve to expect come pay greater prices for in the future.

Fluorescent Lamps: $1.80Microwave Ovens: $14Air Conditioners: $320Dishwashers: $44


There are four notable regulations that will pressure consumers come pay much more at the grocery store. The biggest by far, is the result of the renewable fuel standard. Follow to one EPA analysis, higher commodity price would increase food prices by “roughly $10 per human per year.” Combined, four recent regulation will increase food prices by around $14, including higher prices for eggs and sugar.


Increasing the cost of a mortgage is the most glaring area wherein agencies detailed only qualitative evaluation or merely omitted any extensive conversation of just how regulation might increase costs. AAF uncovered only two rules, out of thousands of Dodd-Frank and other notable rules, which explicitly mentioned they could increase mortgage costs. The largest, “Appraisals for Higher-Risk Mortgage Loans,” requires creditors to acquire an appraisal and carry out applicants a copy the written home appraisals. The agencies approximated this appraisal would certainly cost approximately $350 and also could it is in passed on come consumers.

The various other notable rule increasing mortgage costs is in reality from EPA. The rule, Effluent restrictions Guidelines, can increase monthly mortgages indigenous $1 to $29, depending upon the regulatory alternative. AAF supplied the $1 figure; thus, yearly mortgage prices increase by $12, for a linked $362 boost for these two rules.

Energy Prices

EPA has also “missed the forest for the trees” in its analysis of current power sector regulations. Back it has acknowledged that some of its rules could increase utility bills, the agency has always been cautious to keep in mind price spikes room “small loved one to the changes observed in the absolute levels of electricity prices over the critical 50 years.” However, when combined with four other regulations, variations are no much longer trivial. For one rule, “Utility MACT,” the price rise was 3.1 percent.

EPA additionally issued the Cross-State waiting Pollution dominion (CSPAR), which can increase retail electrical energy prices “by about 1.7 percent.” return the 3.1 percent spike from utility MACT might seem trivial, through CSAPR, consumers could now challenge a 4.8 percent increase. Throughout the year, the average customer could pay around $71 an ext in power costs due to the fact that of these 2 rules.

However, that’s not the end of high energy prices. EPA newly finalized the Tier 3 emission conventional rule, which would lower the sulfur content in gasoline to 10 components per million, native 30 parts per million. The agency listed it would certainly slightly increase automobile prices (noted below), but it would also impose expenses on refiners, which would certainly then be passed top top in the kind of greater gasoline prices. The price increase is less than a cent every gallon, however the per capita influence during the year is about $3.00. In total, consumers deserve to expect to salary $135 yearly in greater energy prices from just a grasp of current rules.

Health Care

Two Affordable care Act rules, coverage for precautionary services and also preexisting conditions, will increase annual premiums by an ext than $87. In the preventative services rule, the management conceded that, “Premiums will increase by roughly 1.5 percent ~ above average.” In the preexisting problems rule, the administration admitted premium increases might vary from 0.2 percent to together high together 6.6 percent. The median projected rise was 1.9 percent, the figure AAF provided to calculation the $49 annual affect of the rule.

Finally, a 2013 rule implementing the Mental health Parity plot is likewise likely to boost premiums. Follow to the administration, brand-new coverage “could be intended to command to rise of 0.8 percent in premiums.” an unified with the 1.9 percent and also 1.5 percent boosts in various other rules, patients now face premium boosts of 4.2 percent. This represents simply three regulations the end of dozens that have actually the potential come raise prices. Combined, this rules will certainly increase annual premiums by much more than $108.


In total, 36 current regulations increased consumer prices by more than $11,100. Because that vehicles, price jumped by an ext than $9,100, the vast majority of the sample’s increase. The $9,100 figure includes three major rounds that fuel efficiency standards, which enhanced prices by approximately $2,800. It additionally includes three security standards, which added $287, and Tier 3 sulfur emissions standards, which will add $72 to higher vehicle prices. However, the biggest increase, $6,000, is native a “typical mix truck/tractor.” an average consumer will be required to pay more than $3,100 for a automobile due come regulation, yet some consumers might spend far an ext because that these new rules.



Beyond higher prices for consumers, the wider economy is also impacted by raised regulatory spending. Because that example, price rises generally result in lessened sales, affecting manufacturers and also consumers.

In EPA’s many recent fuel efficiency regulations, the company concluded, “There is broad consensus in the economic literature the the price elasticity for demand for automobiles is about -1.0.” Thus, a one percent increase in automobile prices results in a one percent decrease in sales. A an unified $3,100 price hike because that vehicles can decrease car sales by approximately ten percent, resulting in billions the dollars in shed sales and also fewer jobs.

See more: How Much Is 1000000 Yen In Us Dollars, 1 Million Yen To Usd Conversion

For energy, the elasticities room slightly less than they room for automobiles: the National energy Modeling device concludes a “1 percent increase in prices leader to a 0.1 come 0.3 percent to decrease in power demand.” For energy MACT and CSAPR alone, a 4.8 percent rise in power prices could result in a 1.4 percent palliation in power demand.

Beyond greater consumer prices and also lessening demand, there is a opportunity that consumer won’t want the recently regulated products, either since of price or preference. The room of Energy provided that brand-new light bulbs “may result in consumers’ unwillingness to purchase them.” Consumers additionally might simply proceed to use their less efficient existing products, rather that purchasing much more expensive items. For CAFE, financial experts Mark Jacobsen and Arthur van Benthem estimate 13 to 23 percent the “the supposed fuel savings will leak away through the used auto market. This considerably reduces the cost-effectiveness that the standard.”


$11,000 in higher consumer prices is a highlight figure, but this represents simply 36 recent rules. In addition, federal agencies listed all the data and there room certainly higher outside estimates. Nevertheless of the final figure, it’s clear that commonwealth regulations increase prices because that every consumer. Although companies commonly comply with brand-new rules, consumer must frequently pay the bill.