OEA Working Paper 48
Abstract: The Federal Communications Commission (FCC) has voted to reorganize most of its economists into an Office of Economics and Analytics in an effort to improve the quality and use of economic analysis. A classic question in organization theory is whether an organization can better utilize the expertise of specialized professionals by grouping them together in a functional organization or mixing them with other professionals in multiple divisional organizations that focus on different topics, technologies, customer segments, or geographical regions.
This paper performs an empirical assessment of organization strategy, employing two different data sets that measure the quality and influence of economic analysis accompanying economically significant regulations from executive branch agencies. It finds that the quality of regulatory impact analysis is better when economists who work on regulations are organized into a separate unit managed by other economists, or when the regulations and analysis are reviewed by economists in a unit separate from the program office that wrote the regulations. Functional organization of economists is not associated with a reduction in economists' influence on decisions.