Consumers value of regulation: A quantitative report
Consumers’ Valuation of Regulation
This quantitative report (and accompanying data sets) commissioned by the Legal Services Board used a statistical technique called contingent valuation to attempt to quantify the amount consumers would be prepared to pay for key regulatory protections. Contingent valuation works by asking consumers to say how much they would be prepared to pay in hypothetical scenarios. In this case, how much they would be prepared to pay for specific regulations in the event that they were purchasing a specified legal service.
Why did we commission this research?
All regulators must have regard to the Principles of Better Regulation in the decisions they make. Understanding whether the costs imposed by regulation, and the potentially harmful effect such costs have, outweigh the benefits delivered can help regulators target the removal of unnecessary or poorly targeted regulation. We commissioned research using contingent valuation to test whether this methodology could be applied to legal services in a way that would prove useful in future analysis of changes to regulation.
What new information did the research tell us?
The research was successful in demonstrating that contingent valuation can be an effective methodology in measuring benefits consumers perceive from legal services regulation. Initial focus groups highlighted the challenge facing anyone using this methodology to get people to place a hypothetical value on regulatory protections. Such hypothetical challenges were particularly challenging given the dominance of the solicitor brand in this market which led to a general presumption that all protections were already in place and were costless.
Testing with focus groups allowed the development of a much more targeted final questionnaire which did engage the majority of respondents. The methodology, with further refinement, could be very successful. Even in this project, the research revealed the importance consumers attached to the core regulatory protections. When considered across the total population the amounts that consumers were willing to pay amount to sizable values placed on the benefits from regulation.
How are we going to use this research?
The research has provided us with a model questionnaire and approach for any future studies looking at the value consumers place on regulation. As we look to analyse in much more detail the costs that legal services regulation imposes, the data we have gained from the report will provide an essential measure of benefits against which the success of legal services regulation can be judged. But, in using this research we are also aware of its limitations. It is at its most powerful in providing relative benefits of regulation between types of legal service or types of protection.
In seeking to take forward our Blueprint for regulatory reform we will be drawing on this research to support regulators in reducing the burden of unnecessary regulation placed on the legal sector.