You can actually predict if an industry is going to tank just by counting how many times the word "shall" appears in its regulations.
SSRN · March 13, 2026 · 6304218
Why it matters
Researchers quantified 'red tape' by measuring the density of binding language (like 'must' or 'shall') in the US Code of Federal Regulations. They found that for every extra restriction per 1,000 words, an industry's real value added drops by about 1.2%, effectively turning legal word counts into a physical drag on GDP.
From the abstract
This paper studies the economic incidence of broad federal regulation across U.S. industries using RegData U.S. 6.0. We measure regulatory stringency using binding language densityexpected regulatory restrictions per 1,000 words-constructed from the text of the Code of Federal Regulations and mapped to NAICS industries using supervised relevance weights. Using the 1970-2025 regulatory panel, we document three stylized facts: (1) binding density evolves through many small year-to-year adjustments