On the Use of Beta in Regulatory Proceedings: A Comment

Abstract

The purpose of this comment is to provide further clarification of the usefulness of Beta as a measure of risk in the regulatory process. Breen and Lerner list several of the problems in using this coefficient and argue that a great deal of caution is necessary when interpreting its meaning, but they fail to provide sufficient or correct reasons for their concern. Although the comment is critical of the Breen-Lerner paper, it also redirects attention to the real problems associated with using the Beta coefficient in regulation.

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