The deregulatory moment of the late 1970s increased the policy influence of economics in the United States by linking the efforts of two distinct communities of economists: a systems analytic group and an industrial organization (I/O) group. The systems analytic group, which used cost-benefit analysis to improve government decision making, had considerable success in the 1960s and helped create offices of economists throughout the executive branch, but was losing momentum by 1970. The I/O group was, by the mid-1970s, working from the White House to reduce economic regulation—eliminating price and entry controls across a range of industries—but its ability to act was limited. After 1975 the I/O group increasingly focused on social regulation—rules meant to improve health, environmental, or safety conditions—and pushed for cost-benefit/cost-effectiveness analysis of such regulations. In the process, its efforts became linked with the legacy of systems analysis, leading to legal requirements for cost-benefit analysis of regulation and the expansion of executive-branch offices oriented toward economics—changes that opened doors to the future exchange of ideas between academe and the policy domain.

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