Evidence on public policy: Methodological issues,political issues and examples

Abstract

In this paper I discuss how evidence on public policy is generated and in particular the issue of evaluation of public policies. In economics, the issue of attribution and the identification of causal links has recently received considerable attention. Important methodological issues have been tackled and new techniques have been proposed and used. Randomized Control Trials have become some sort of gold standard. However, they are not exempt from problems and have important limitations: in some case they cannot be constructed and, more generally, problems of external validity and transferability of results can be important. The paper then moves on to discuss the political economy of policy evaluations for policy evaluations to have an impact for the conduct of actual policy, it is important that the demand for evaluation comes directly from the policy making process and is generated endogenously within it. In this sense it is important that the institutional design of policy making is such that policy making institutions are incentivized to use rigorous evaluation in the process of designing policies and allocating resources to alternative options.

Economists are currently involved in the design and evaluation of many policies, including policies about health, nutrition and education. The role they can play in these fields is not completely obvious. The paper argues that their main contribution is in the modelling of how individual reacts to incentives (including those provided by public policies).