Political Economy Forum
June 27, 2020
What would evidence-based policy look like if we took it seriously?, by Victor Menaldo
One of the goals of the Political Economy Forum is quite simple: to promote evidence-based policy. What does that mean exactly? My take is that it includes several components:
- Policy should be informed by facts, logic, and evidence.
- Policymakers should perform cost-benefit analysis before making decisions.
- When formulating policy, policymakers should not only consider first order effects (the partial equilibrium), but second order effects (the general equilibrium) as well. That includes acknowledging unintended consequences such as perverse incentives (e.g., moral hazard that increases risk-taking) and behavioral adjustments that undermine their best of intentions (e.g., the fact that price controls lead to rationing, followed by black markets, followed by rent seeking, followed by patronage: the politicized allocation of scarce goods).
- Center left policy goals, including equality, justice, and dignity, actually have greater success in an environment where liberalism thrives: free speech, academic freedom, open debate, disagreement, and mutual respect and forbearance, in which we give each other the benefit of the doubt and assume the best about each other: The (perhaps now old-fashioned) laboratory of ideas model.
- We should reformulate claims about the world into questions about the world that are falsifiable, that can be stated as hypotheses and rejected with evidence; moreover, when doing so, we should try to bias against ourselves (make it easier to reject our priors) and always refuse to indulge in motivated reasoning and confirmation bias.
- We should be open to changing our mind in light of evidence, even if we hold steadfast to a consistent set of values and objectives that seems to prescribe one way of doing things instead of another. That is, let’s not confuse the means (the policies and how they are implemented) with the ends (what we hope to achieve collectively).
- Finally, the idea that informing policy with facts, logic and evidence — in other words, the scientific method — does not mean that scientists can dictate to policymakers or the general public what our ultimate values and objectives should be. These things have to come from outside science because science is a method for adjudicating claims about the material world, both descriptive and causal, not a blueprint for collective decisions. Of course, we can use social science to study the origins of values and social objectives, and sociology, psychology, anthropology and to a certain extent political science and even economics do that; plus, there is a debate between researchers as to whether these things are intrinsic and universal versus socially constructed and arbitrary. But values and objectives transcend science because they are not hypotheses to be tested with data, they are unfalsifiable claims about how we should live our lives. Deciding how to live, what to value and strive for, and what to praise and condemn, is the province of philosophy, politics, ethics, and everyday experience. We should admit that much when doing evidence-based policy and not allow scientific experts and expertise to blindly tell us how to live our lives–those are hard choices we have to make; rather, what scientists can do best is help us reach our goals in the most efficient manner. They are a terrific complement to cost-benefit analysis if that is indeed the framework we choose to operate under. That’s because they provide the facts, logic, and evidence needed to reach judicious collective decisions.
How do we try to do all this at the Forum?
- Take a polemical topic rife with heated partisan beliefs and rhetoric: Competing factions make strong claims that they believe in fervently, even dogmatically.
- Transform their claims into questions.
- Use facts, logic, and evidence to adjudicate those questions.
- Once we agree on the tentative answers to those questions, let’s see if we can arrive at a consensus about using cost-benefit analysis to reach collective decisions, albeit decisions animated by shared values and objectives.
- Rather than giving scientists a blank check about how to implement those goals, let’s default to liberalism and promote debate, discussion, and deliberation, grounded in the knowledge that even the best facts, logic, and evidence are always tentative and that, as flawed human beings, we don’t have all the answers and are subject to blind spots and prejudices. Liberalism is a framework that is well suited to helping us consider the tradeoffs associated with policies, the potential winners and losers, and how to optimize on the road to advancing our objectives together.
Here are links to two of our blog posts that embody the ethos I outlined above:
Blog post #3, Magistro and Wittstock on the Economic Effects of Immigration
Please chime in and let me know if I’ve gotten something wrong — I would be open to changing my mind!
