Public Consultations on Regulatory Impact Assessments and their (potentially undesirable) effect on citizen trust on regulatory agencies

Regulatory agencies need the trust of the citizens affected by their actions. Trust indicates how people perceive the quality of government institutions and guides how they will engage with such institutions (OECD, 2022). Moreover, there is evidence that citizens' trust in regulated organisations is moderated by how much they trust the regulators (Six & Verhoest, 2017), which means that increasing trust in regulatory agencies likely generates benefits beyond the citizen-government relationship. This paper is interested in the dynamics of trust (and distrust) building in the regulatory arena, focusing on the citizen trustworthiness judgment (Dietz, 2011). Many countries have adopted Better Regulation measures, such as Regulatory Impact Assessments – RIA - and Public Consultations, to improve regulatory legitimacy and quality (Baldwin, 2007; OECD, 2021). The adoption of this combination of RIA and public consultation may have a positive effect on citizen trust. Decision transparency is often seen as a way to increase trust - albeit dependent on the regulatory domain (Grimmelikhuijsen et al., 2021), and so is the perception that an agency is motivated to act in the public interest (Walls et al., 2004). Consultations also increase some individuals' acceptance of decision-making procedures and regulatory outcomes (Beyers & Arras, 2021). However, if, on the one hand, evidence-based and participatory policymaking can be seen as complementary to improve regulation (Bunea & Chrisp, 2022; OECD, 2021; Radaelli et al., 2022), on the other, the literature has identified potential tensions between these goals (Baldwin, 2007). For example, regulators may get captured by some stakeholders (Stigler, 1971). Additionally, merely consulting citizens without giving proper consideration to their eventual comments can result in frustration (Arnstein, 2019; Young & Tanner, 2022). In sum, engagement mechanisms may simultaneously have legitimising and de-legitimising effects (Braun & Busuioc, 2020). In this paper, we investigate the hypothesis that implementing public consultation procedures without actively seeking citizen participation will lead to decreased trust in regulatory agencies. We expect this will happen if it is made salient to citizens that their voices are not heard during the agencies' decision-making processes. We also posit that such an effect will be more substantial when regulation results in a direct adverse impact on citizens (such as tariff hikes). To investigate these hypotheses, we employ a pre-registered experiment embedded survey (to be run in the first quarter of 2023). We designed the study to assess the respondents' level of trust in three Brazilian regulatory agencies (using the scale validated by Grimmelikhuijsen & Knies, 2017) under conditions designed to expose them to hypothetical scenarios concerning how the agency deals with citizen participation in its RIA consultations. We manipulate whether the agency actively seeks a citizen perspective and the effects of the rules eventually enacted (positive or negative). We expect the results to show that merely adopting open consultation procedures is not enough to ensure that the regulatory agencies will score higher on the citizens' trust judgement. This finding suggests that agencies should take additional steps to include citizens in their policymaking decisions actively.