23 June 2013

Evidence-based policymaking

John Bridgeland and Peter Orszag write about evidence-based spending decisions. It's a form of data mining, and has been applied to baseball "...replacing scouts’ traditional beliefs and biases about players with data-intensive studies of what skills actually contribute most to winning" but "is just as applicable to the battle against out-of-control health-care costs."
Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely. As former officials in the administrations of Barack Obama (Peter Orszag) and George W. Bush (John Bridgeland), we were flabbergasted by how blindly the federal government spends. In other types of American enterprise, spending decisions are usually quite sophisticated, and are rapidly becoming more so: baseball’s transformation into “moneyball” is one example. But the federal government—where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships—has missed this wave. Can Government Play Moneyball, 'the Atlantic', July/August
It's encouraging that, after wasting billions of dollars in programs that do little other than subsidise the lifestyles of opponents of their removal, the US Government is looking at a more rational basis for allocating funding. The authors concede that change in this direction will be difficult:

Still, linking evaluation to program funding will be tough, as both of us have seen in practice, again and again. One thing that is essential to a more results-driven government is holding politicians accountable for their support of failing programs. Interest groups regularly rate politicians on their adherence to a particular perspective. What if we had [an index] easily accessible to voters and the media, that rated each member of Congress on their votes to fund programs that have been shown not to work?
OK; certainly an improvement on the dogs' breakfast that is the current policymaking environment. But we could, perhaps, envisage a system that doesn't require politicians to react to information in ways that conflict with their own interests? A Social Policy Bond regime would do this, because it would contract out the development and implementations of programmes to investors in bonds targeting a social goal. It would take resource-allocation decisions out of the hands of government, and put them into the hands of entrepreneurs, with no inherited resistance to change.

A Social Policy Bond regime would have other advantages over the system advocated by Messrs Bridgeland and Orszag. The evidence-gathering wouldn't be prone to corruption and gaming, as there would be no vested interests to keep happy. And it would be done on a dynamic basis, not as a one-off exercise designed to set policy for an indefinite number of years into the future.

Still, it's encouraging to read about evidence-based policymaking. The authors refer to a non-profit organization called Results for America, which is advocates for it. See here for more.


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