Reviewing Procedure vs. Judging Substance: The Scope of Review and Bureaucratic Policymaking

How does the scope of review affect bureaucratic policymaking incentives? To explore this ques- tion, I consider a simple policymaking environment in which an expert agency develops policy that is upheld or overturned by an overseer who may have different policy goals. The agency can affect the quality of implementation through effort investments in addition to choosing the substantive content of policy. Under procedural review the overseer only reviews the agencys effort, which allows the agency to fully utilize its expertise, but may harm effort incentives. Sub- stantive review also tasks the overseer with judging agencies substantive policy choices, which introduces a fundamental trade-off between agency utilization of expertise and effort investment due to pathological policy choices made by the agency. The theory characterizes when less trans- parent oversight, procedural review, is optimal relative to more transparent, substantive review. The results speak to when agencies should be insulated from substantive review.