New Research: Do Sunset Laws Actually Work? The Evidence Is In

Ryan Quandt, Ph.D.

Issue Areas

Laws that automatically terminate agencies or regulations unless the legislature votes to renew them, commonly known as sunset provisions, have been a staple of state-level governance since the 1970s. But do they actually deliver on their promise of leaner, more efficient government? New research published by Cicero Institute’s Ryan Quandt in the Journal of Regulatory Economics offers the most rigorous empirical test to date.

In “An Iridescent Sunset,” Quandt analyzes a state-year panel spanning 1963–2022 and distinguishes three types of sunset provisions (agency-based, rule-based, and executive-led) that prior research had lumped together. Using staggered Difference-in-Differences and synthetic control methods, they find meaningful economic gains associated with sunset adoption, though the story depends heavily on institutional design.

For agency-based sunsets, the DiD estimates imply a roughly 27 to 60 percent increase in real GDP per capita over time. For rule-based sunsets, Tennessee stands out as the clearest success case, showing a roughly $3,000 per capita GDP gain relative to its synthetic control following its 1991 adoption. This gain persisted over the full panel. New Hampshire and Utah showed positive but statistically inconclusive results, and Idaho’s executive-led reset was too recent to evaluate fully.

Quandt and his team interpret these findings through a “Cleaning House” hypothesis: sunset provisions deliver a front-loaded, one-time reallocation of resources away from low-value agencies and rules, not a permanent boost to the growth rate. What makes Tennessee distinctive is its uniquely stringent design: administrative rules automatically expire within one year of promulgation unless the legislature explicitly renews them, combining rule-based expiration with agency-based oversight in a dual-layered framework.

The practical takeaway for policymakers: having a sunset clause on the books is not enough. What matters is whether the expiration default is credible, whether the legislature has the capacity to conduct meaningful reviews, and whether the design matches the target: rule-based sunsets for regulatory stock management, agency-based sunsets for organizational rationalization.

The full paper is available in the Journal of Regulatory Economics. The replication data and code are publicly available on ICPSR at: https://www.openicpsr.org/openicpsr/project/247473/version/V1/view