Effects of Federal Regulation on U.S. Society




Edward B. Shils Professor of Law and Professor of Political Science

Project Summary

This summer I had the opportunity to research federal regulations under the mentorship and guidance of Professor Cary Coglianese of the Penn Program on Regulation and Penn Law. During my time as a research assistant, I worked primarily on two projects: a book manuscript about the distributional effects of regulations and a forthcoming journal article on coal stockholder reaction to environmental regulations.

In developing a book manuscript edited by my mentor, I learned about the incredible complexity behind evaluating the distributional effects of federal regulations.  I conducted several literature reviews of studies in seven types of regulation: pharmaceutical, environmental, automobile, electricity markets, antitrust, antidiscrimination, and Occupational Safety and Health Administration (OSHA).  To my surprise, I discovered there is only a small amount of research, both before and after the regulations are implemented, and the tools to evaluate these regulations are quite limited.  It was interesting to study this, since I always assumed that distributional issues were studied by regulators more effectively.  Considering this book will be one of the first efforts to empirically assess the proportional effects of regulations on U.S. society, I was excited to learn of modern evaluation techniques at the forefront of this distributional analysis.

As part of the professor’s forthcoming article, I also studied the impact of environmental regulations – their signing, implementation, court cases, and potential repeal – and how they affect behavior of the top coal companies’ stock prices.  For more than a decade, “war on coal” rhetoric has led to the perception that regulations are a major cause of the coal industry’s decline.  However, as Professor Coglianese and Professor Daniel Walters’ research finds, this is not the case when studying regulations that indirectly impact the coal industry.  After observing the stock price reaction of the top 21 coal companies to major events associated with the Clean Power Plan, Mercury and Air Toxics Standards, and the Cross-State Air Pollution Rule, it was clear that most events resulted in a non-significant change in stock prices.  Only the signing of the Clean Power Plan revealed some negative reaction by the stock market, but the causality was unclear due to the announcement of the Alpha Natural Resources bankruptcy the same day.  Overall, these events demonstrate that stockholders do not believe that these indirect environmental standards are as detrimental as the “war on coal” rhetoric suggests.  They likely are more concerned about other threats to coal, such as the rising popularity of natural gas and green technology. 

These two projects taught me much about the day-to-day tasks of procuring a thorough research article and the many bouts of editing and data collection that go into perfecting its arguments and evidence.  My PURM experience was a great opportunity for me to strengthen my interest in going to law school after graduating from Penn and to improve invaluable skills that will be especially useful in my future career.