Malcolm Sparrow (2020), Self-published, 139 pages

Locked-down by the global pandemic and unable to deliver his regulatory training around the world, Professor Malcolm Sparrow (Harvard University) decided to put the core content of his training programs on paper. In Fundamentals of Regulatory Design, he guides us through some of the main themes that he usually touches on in his classes. The book is brief and to the point and tackles five major regulatory design issues.

The first three chapters force readers to think critically about regulation and how they approach it (assuming that most readers of the book will be working in a regulatory agency). In chapter 1, readers are asked to think about whether regulation is about compliance management, harm prevention, or both. Often it will be both, but what to do in situations of illegal but unharmful behaviour, and what to do in situations of harmful but legal behaviour?

Chapter 2 moves on from here and asks the reader to think about the aim of regulation. Is it about “controlling bads” or is it about “promoting goods”? Different prior understandings of the aim of regulation will, logically, result in different preferences for regulatory interventions and strategies. This is, indeed, the focus of Chapter 3. Prof Sparrow suggests the reader to approach regulatory challenges open-minded, without preference for using specific interventions and strategies. This asks of regulators to know what interventions and strategies will work best in what situations.

Chapter 4 zooms in on the message Prof Sparrow is most known for, “pick the biggest problem, fix it”. In this chapter, the reader is challenged to think critically about program-centric approaches to “fix” regulatory problems and problem-centric ones. Program-centric approaches develop a variety of programs to address a regulatory problem and tasks frontline workers to deliver parts of these programs. Problem-centric approaches first unpack the regulatory problem in smaller ones, in its constituent parts. For each “subproblem” a suitable regulatory intervention or strategy is then chosen.

In Prof Sparrow’s understanding, the program-centric approach is tight on solutions but loose on problem descriptions. The problem-centric approach is flexible on solutions but tight on problem descriptions. Both approaches have their value, but it is of importance for the regulator to understand what approach is suitable in what situation.

Chapter 5 completes the book with a discussion of a range of regulatory models and structures: command-and-control regulation, performance-based regulation, self-regulation by firms, and self-regulation by industry associations. These models and structures are explored side by side to understand which is most suitable in what setting.

Disclaimer

In these brief book reviews, I discuss classic and contemporary books that make up the canon of regulatory scholarship. I focus on their central guiding idea or core notions and aim to keep the reviews to around 500 words. Unfortunately, this implies I must sacrifice a considerable amount of detail from the books reviewed.