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Social policy evaluation: concepts , methods and limits.
• Titre
• Titre
Social policy evaluation: concepts , methods and limits.
1. Introduction
Socio-political aspect of evaluation: concerns all of us: beneficiary, taxpayer, voter and decision maker
Economic aspects: efficiency, costs and benefits analysis
Question:What can be obtained at what cost and at what probability
Quantitative methods
Micro simulation: ex ante and counterfactual ex post reform valuation.
Micro economic methods – ex post program evaluation:
Qualitative methods (interviews, experts…)
Socio-political dimension: beneficiary, taxpayer, voter and decision makers
Citizen – Voter
Taxpayer Beneficiary
Parliament
Government Administration and NGOs
Social policies: an interactive process
- Socio-economic needs: labor market policies (unemployment - work incentive policies) social sector financing (retirement founding, social VAT,
redistribution policies).- Reform projects (programs, expected results )
- Ex ante: expected effects’ evaluation.
- Controlled experiments (pilot programs: regions, populations)
- Implementation (legal and administrative procedures, financing rules)
- Ex post evaluation: proportion of positive responses, result-expectation analysis, take up evaluation
- Feedback (continuation, correction, abandonment)
- Risks of political sanction (election) evaluation
Evaluation of social and fiscal policies simulation and micro econometric methods
Unemployment expenditure (directs, actif and tax reductions)billions
euros
2000 2001 2002 2003 2004 2005
Unemployment compensation 20659,72 21837,71 26124,22 29242,85 30441,89 29 817,23
Activation policies 26526,85 27362,48 27776,65 26859,13 26198,36 26 168,25
Tax and contribution reductions 11576,14 14416,01 15424,75 16090,39 16275,48 17 193,43
Total unemployment expenditure 58 762,71 63 616,19 69 325,62 72 192,37 72 915,72 73 178,91
GDP % 4,34 4,48 4,65 4,66 4,51 4,35
source DARES, 2007
Economic challenges of policy evaluation:
Costs of implementation and costs of non implementation !
Social policy evaluation: concepts , methods and limits.
Evaluation criteria of programs and reforms:
Adequacy : well defined and well targeted
Efficiency: economically rational equitably founded
Efficacy : fulfills the objectives
Social policy evaluation: concepts , methods and limits.
Main difficulties:
The lack of the appropriate data: statistics (surveys and administrtive files), experimental data (voluntary or natural experiments)
The absence of the control group . (program participants versus non participants)
The complexity and interdependence of different segments of socio-economic and tax-benefit systems: sédimentation process and internal policy contradictions)
Unobserved hetérogénéité of individual situations and individual behaviours
Social policy evaluation: concepts , methods and limits.
Social policy evaluation: concepts , methods and limits.
Microsimulation methods
Origin and interest : Welfare state reforms in 1980ies (tax –benefit systems, pension systems, redistribution rules modifications). It was highly political issue generating the need for independent control and monitoring (equity, redistribution problems)
Opportunity: the development of micro econometric methods and microeconomic data bases
Micro - because based on the individual observations which allows the measure the program and reform impacts by modelling the individual behavior.
Simulation - because many variants of changes in socio-economic systems rules can be simultaneously or sequentially introduced generating numerous predicted outputs in terms of new behaviors or new system states
Social and fiscal policies simulation and micro econometric evaluation methods Microsimulation
Micro-simulation model structure
- Exogenoeus rule unit (tax benefit système: income, consumption taxes, tax, contributions, benefits, with founding flows)
- Individual data base (surveys, administrative data, with updating models, with transition probabilities, matching procedures…)
- Behavioural models : individual reactions as a consequence of the (new) rules’ application (labour supply , consumption, tax evasion, informal market participation…).
Social policy evaluation: concepts , methods and limits.Microsimulation
The rules can be deterministic (tax burden) or stochastique (demographic events like marriages,
births, divorces)
The effects are measured in global level terms (tax expenditure for example)distributional terms (distribution of income effects).
Frequently used indicators inequality (redistribution) measuresequity work incentive measures (marginal tax rates)
Social policy evaluation: concepts , methods and limits.Microsimulation
Data base
Database – the essential element for micro simulation. As exhaustive as possible on both individual characteristics and socio-economic environment description. The need for permanent updating (time and coverage).
This is somewhat utopist postulate. No survey or administrative file can provide all needed information. The lacking information of interest can be completed by indirect methods – matching or imputation (Family budgets survey with tax files for example or imputing demographic events’ probabilities.
Evaluation des politiques sociales et fiscales Modèles de microsimulation: un outil d’aide à la décision et d’évaluation ex ante
Microsimulation la base de données
Evaluation des politiques sociales et fiscales Modèles de microsimulation: un outil d’aide à la décision et d’évaluation ex ante
Microsimulation
Exemple imputationModèle INES (INSEE)
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itérations
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Actualisation
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Social policy evaluation: concepts , methods and limits.Microsimulation
typology
Static models (no time dimension)
Typical household sets
Artificially built different socio-economic family structures (couple one child, median income…) to which the tax benefit system rules are applied.
Frustrating because non representative they can give a good idea of tax-benefit system interactions (effective marginal tax rate (EMTR) for example), and more generally threshold effects)
Simple static models (without behavioural adjustment)
The typical household set is replaced by an individual data base. The policy impacts are observed on representative sample of the total population. The policy changes effects are computed for every individual comparing the situation after and before the policy change. Typically the lost and gains in term of disposable incomes can be computed for every individual or for group of individuals (different types of households, income groups). The results is often given as a change in relative individual’s position in terms of well being or income distribution.
Social policy evaluation: concepts , methods and limits.MicrosimulationSocial policy evaluation: concepts , methods and limits.
Microsimulationtypology
Static models (no time dimension)
Static Models with behavioral responses:
The individual response behavioral model is added to the simple static model (labour force supply model, consumption behavior model). Then the obtained individual behavioural parameters (elasticities) are used to correct the results for the effect of individual adaptation to the new situation. Typically for the change in VAT taxation reform, a Consumer Demand System is estimated and all elasticities are derived.
Social policy evaluation: concepts , methods and limits.Microsimulation
typical household analysis exemple
(Tax reform effect on the marriage versus partnership union after PPE ( low wage workers allowance)
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
0 10 000 20 000 30 000 40 000 50 000 Salaires déclarés par Monsieur (en Euros)
Sala
ires d
écla
rés p
ar
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e (
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Double décote pour les concubins
Effet de la PPE
avantage aux couples mariés
équivalent
avantage aux couples en concubinage
couple without children,, S. Guérin INSEE, Et. Sociales
Social policy evaluation: concepts , methods and limits.Microsimulation
typology
Dynamic micro simulation models
Similar structure than those of static ones (typical households, models with behavioral response, models without behavioral response.
The time dimension is introduced with appropriate changes especially as far as population evolution. The data base individuals “are moving” in the time (get married, have children , divorce, get a job, become unemployed… by associaton of the estimated probabilities of all these events).
Simultanoeusly to these events the changing socio-fiscal rules are applied over the life cycle and ll outcomes are added.
Social policy evaluation: concepts , methods and limits.Microsimulation
typology
Dynamic typical household analysis typical households situation over the life cycle Typical households are multiplied in time dimensions making their structure vary in the with respect to their hypothetical life cycle events. (Madinier, Sahut d’Izarn, 1992).
Dynamic models with behavioral response, without “feedback”
first – econometric simulation of data base demographic evolution using the transition probabilities of state changing (birth, marriage, divorce, retirement, unemployment)
second –simulation of life cycle income evolution
third – the income effects different variants of evolution of the tax benefit system, and the labor market are estimated.
Dynamic models with behavioral response and with "feed-back”
Inter temporal choice individual model are added with possible response on the change in socio-economic environment.
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Scénario 1,2,3
Social security founding reforms : lowering work taxation by substituting health contribution (paid as proportion of wages) by a general, flat rate tax on all incomes.
Social policy evaluation: concepts , methods and limits.
MicrosimulationMicrosimulation Model (INSEE)
simulation examples
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
-8
-6
-4
-2
0
2
4
6
vari
ati
on
en
%
5 15 25 35 45 55 65 75 85 95 100 touscentiles du revenu disponibles en %
prélèvement cotisation csg impôt
SCENARIO N°1
Scénario 1
Suppression des cotisations sociales maladie financée par CSG :+ 4,5 points et augmentation de l’impôts par la non déductibilité de la CSG
Social policy evaluation: concepts , methods and limits.MicrosimulationINES model (INSEE)simulation examples
Tableau II-1-2 SCENARIO 1, variation en % rapportée au revenu déclaré initialdu prélèvement total selon la Cs du chef du ménage et le type de famille
personnes
homme femme famille couple tous
en % sans lien de famille
seul seule mono-parentale
sans enfant
avec 1 ou 2 enfants
avec 3 enfants ou plus
ménages
agriculteurs exploitants
0.2 1.5 0.9 -0.1 0.7 0.4 -0.1 0.4
artisans, commerçants et chefs d'entreprise
0.9 1.6 2.5 0.7 1.5 1.4 1.7 1.5
cadres supérieurs et professions libérales
0.3 0.7 0.5 1.0 0.5 0.2 0.3 0.4
professions intermédiaires
-0.6 -0.3 -0.3 -0.9 -0.7 -0.9 -1.2 -0.8
employés -0.7 -0.6 -0.7 -1.2 -0.8 -0.9 -1.4 -0.9
ouvriers -1.0 -1.3 -1.3 -1.9 -1.2 -1.8 -2.4 -1.7
retraités et inactifs 0.6 1.7 1.6 -0.2 1.6 0.7 -1.1 1.4
toutes CS 0.2 0.4 0.9 -0.7 0.8 -0.4 -0.7 0.0
Evaluation des politiques sociales et fiscales Modèles de microsimulation: un outil d’aide à la décision et d’évaluation ex ante
Microsimulation Modèle INES (INSEE)
Exemples de simulations
GINI
de l’impôt sur le revenu
du revenu disponible
du revenu disponible par UC
1996 référence 0.77967 0.33917 0.29765
Scénario 1 0.76382 0.33605 0.29180
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
TABLEAU II-1-9
TAUX MOYEN D’IMPOSITION SELON LE CENTILE D’IMPOT
centiles d’impôt référence Scénario 1 Scénario 2 Scénario 3 5 0 0 0 0 10 0 0 0 0 20 0 0 1.2 0.5 30 0 0.4 2.8 1.5 40 1.4 2.0 4.0 2.5 50 3.3 3.9 5.3 3.3 60 5.0 5.7 6.7 4.6 70 6.9 7.6 8.6 6.1 80 9.0 9.7 11.1 7.9 90 12.8 13.6 15.4 11.8 95 17.9 18.9 21.3 17.0 99 25.3 26.6 28.3 23.19 100 33.3 34.1 34.6 29.0 Tous 7.9 8.5 10.0 7.4
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Scenario 1-
- by income level
Advantageous for low income increase in taxes, but lower contributions, finally lower global tax burden
For 6-th-7th decile global tax burden is unchanged .
For _8th and higher deciles reform is disadvantageous. Direct tax increase is higher then the decrease in social contribution.
- by family type
Large families from lower social classe are beneficiaries of the reform.
Retired and selfemployed are loosing independently on their family situation
Middle class professions improve their situation proportionally to the family
Globaly: no change in inequality, but another shape of redistribution
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
TABLEAU II-1-10
NOMBRE DE MENAGES IMPOSES
référence Scénario 1 Scénario 2 Scénario 3 Nombre de ménages imposés en millions
13.51 14.17 17.85 17.23
proportion de ménages imposés en %
61.7 64.7 81.5 78.6
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
TABLEAU II-1-11
CONCENTRATION DE L’IMPOT : MASSE CUMULEE D’IMPOT PAR CENTILE D’IMPOT
centiles d’impôt référence Scénario 1 Scénario 2 Scénario 3 5 0 0 0 0 10 0 0 0 0 20 0 0 0 0 30 0 0 1.1 0.7 40 0.1 0.4 3.2 2.3 50 1.8 2.6 6.4 5 60 5.5 6.6 11 9 70 11.5 12.9 17.5 14.9 80 20.9 22.7 27.2 24.1 90 36.8 38.6 42.6 39.1 95 50.5 52.2 55.8 52.2 99 73.8 75.1 77.7 75.4 100 100 100 100 100
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Conclusions are incomplete: the lack of essential response: what impact on the unemployment ? In order to answer that question behavioral the model of labor supply is necessary.
The behavioral response model is needed.
In the case of employment the situation is difficult: many problems to obtain coherent labor supply and labor demand elasticities.
Instead the example of consumption.
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural component example : value added tax reform
Reform projects: « Social »VAT, lowering VAT as an incentive for legal employment in some sectors: hotel- restauration, construction.
A behavioural madel is needed to compute –income and price elasticities
Rise in VAT=rise in prices implying income and substitution effects.
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
Théoretical model Linear Expenditure System (LES)
With very well known direct and indirect utility functions:
u q Log qi i ii
n
( ) . ( )
1
v y p y p pi ii
n
ji
nj( , ) ( . ) / ( )
11
Model estimated on grouped data from matched fiscal and consumption surveys
The demand system
.
p q p y pi i i i i k kk
n
( )
1
avec ii
n
1
1
Social polcy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
Social polcy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
élasticités à la dépense totale avec le modèle I élasticités sur la
cellule moyenne moyenne minimum maximum écart-type
alim. à domicile (A1)
0.497 0.522 0.246 1.912 0.184
alcools & tabacs (A2)
0.693 0.938 0.170 31.937 1.441
alim. hors domicile (A3)
1.231 3.147 0.339 121.087 7.994
effets, soins personne (B1)
1.256 1.529 0.411 15.912 0.843
logement (C1) 0.775 0.784 0.344 1.569 0.207
chauffage & éclairage (C2)
0.462 0.486 0.162 1.474 0.186
équip. services dom. (D1)
0.263 0.370 0.072 6.721 0.307
santé, hygiène (E1)
1.099 1.378 0.205 12.091 0.851
auto, moto (F1) 1.343 2.698 0.526 328.605 11.365
autre transport (F2)
0.869 2.383 0.113 197.427 7.371
télécommunications (F3)
0.593 0.619 0.214 1.675 0.206
loisirs, culture (G1)
1.362 1.750 0.538 11.617 0.954
autres biens, services (H1)
1.571 4.932 0.247 199.331 12.333
Social polcy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
Distribution des élasticités prix-propre non compensées avec le modèle I élasticités sur la
cellule moyenne moyenne minimum maximum écart-type
alim. à domicile (A1)
-0.398 -0.410 -1.667 -0.102 0.162
alcools & tabacs (A2)
-0.494 -0.649 -23.537 -0.050 0.986
alim. hors domicile (A3)
-0.869 -1.947 -65.879 -0.197 4.550
effets, soins personne (B1)
-0.890 -1.004 -8.290 -0.212 0.472
logement (C1) -0.620 -0.608 -1.332 -0.213 0.147
chauffage & éclairage (C2)
-0.336 -0.346 -1.191 -0.051 0.162
équip. services dom. (D1)
-0.183 -0.232 -3.961 -0.054 0.174
santé, hygiène (E1)
-0.787 -0.932 -6.214 -0.208 0.558
auto, moto (F1) -0.951 -1.524 -119.582 -0.368 4.272
autre transport (F2)
-0.614 -1.534 -128.098 -0.064 4.705
télécommunications (F3)
-0.421 -0.425 -1.523 -0.050 0.170
loisirs, culture (G1)
-0.959 -1.107 -5.575 -0.331 0.442
autres biens, services (H1)
-1.096 -2.868 -99.886 -0.159 6.253
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
Simulated reform: unification of several VAT levels 1%, 5.5% et 20.6 into one:15%
Hypothesis
- the change of VAT is entirely integrated into retail prices
-The total expenditure remain unchanged – only substitution effects, no change in saving behaviour
- tax revenue reamains constant.
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
Variation de la TVA suite à l’harmonisation des taux normaux et réduits, selon le type et le niveau de vie du ménage
en francs centiles de revenu disponible par uc
revenu disponible par uc
seule, autre couple sans enfant
couple 1 enfant
couple 2 enfants
couple 3 enfants
famille mono-parentale
tous
5 24213 159 267 493 653 1050 230 389 10 44120 214 323 497 615 1058 213 392 20 53297 176 429 281 442 812 198 364 30 63226 134 407 203 269 694 40 273 40 72897 52 400 55 94 585 -103 174 50 82393 26 326 63 25 412 -154 123 60 92986 -24 172 -27 -30 308 -314 25 70 106262 -156 79 -236 -147 192 -413 -102 80 123715 -245 5 -384 -264 -258 -333 -203 90 152387 -384 -206 -620 -456 -461 -266 -381 95 196847 -492 -412 -1172 -1236 -367 -493 -639
100 351461 -443 -544 -1134 -1336 -122 -579 -667 tous 105542 -53 88 -203 -79 505 -47 1
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
Effets comparés de l’harmonisation du taux normal et du taux réduit de TVA dans le cadre du modèle statique et du modèle L.E.S.
-0.6
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
% r
ev
en
u d
isp
on
ible
1*2 3 4 5 6 7 8 9 10* 1*2 3 4 5 6 7 8 9 10* 1*2 3 4 5 6 7 8 9 10* 1*2 3 4 5 6 7 8 9 10*déciles de revenu disponible par uc
L.E.S. statique
harmonisation du taux normal et dutaux réduit de la tva
couple sansenfant
couple 1enfant
couple 2enfants
couple 3enfants & +
* le 1er vingtile et le dernier vingtile sont éliminés
Social policy evaluation: concepts , methods and limits.Microsimulation
INES model (INSEE)simulation examples
Behavioural responses VAT reform
.
Conclusion: the behavioural effect introduction did not change considerably the results despite of rather large scale of the reform.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples
.
Destinie microsimulation model was built to analyse different scenarios in retirment systems.
Individual life trajectories are simulated 50 years ahead
Annual and individual base- every year the probabilities of change in individual demographic marriage, divorce, situaitions…and economic (employment, unemployment, wage evolution , retirment) are estimated.
(Remember in static models the population does not change!)
The fertility rate is supposed to influence the retirment schemes.
Data base- Family History survey and Census sample (250 000)
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples
.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples
.
Essential estimated parameters:
Demographic transition probabilities
Labour market transition probabilities (employment survey)
Labour participation probabilities evolution (especially women)
Wage evolution model (with individual fixed effects, exogenous chocs and and productivity evolution
Wae dynamics in public secotor
Several specific surveys and administrative files have to be used to obtain these parameters.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples, public administration pension reform
.
2003 reform
General objectif – later retirment for cicvil servants
Longer working period shift from 37,5 to 40 years for full pension.
Bonus malus system for longer or shorter working period
Minimum guarantee rules changed.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples, public administration pension reform
.
Effects on the number of retired
Effects on the total civil pension expenditure
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples, public administration pension reform
.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples, public administration pension reform
.
Social policy evaluation: concepts , methods and limits.Microsimulation
DESTINIE model (INSEE)dynamic model
simulation examples, public administration pension reform
.
Social policy evaluation: concepts , methods and limits.Microsimulation
Ex ante evaluation final remarks
.
Very useful to learn about possible interactions effects of existing systems in Good prediction of reform consequences but on relatively high aggregation level. Not very adapted to regional studies, when specific longitudinal data not available or particular sub- population . Limits: available data implying the necessity of combining many different sources, updating difficult especially in changing Individual behaviour modeling limits – heterogeneity of individual situations,
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Question: how to measure the program or reform impact? The « output » of a program is often defined in terms of “additionnality”:
Difference between the outcomes under the new program and the outcomes which would have occurred without the program.
Ex: tax credit for unemployed who would accept a low paid job:To what extent the decreasing unemployment the effect of the program, or the economic growth,
demographic evolution. Problem how distinguish between the two effects.
The main difficulty: estimate the outcomes which would have occurred without the program. This is called the counterfactual.
All ex post evaluation methods try to estimate this figure directly or indirectly, as an necessary element to obtain the additionnality.
Ex post policy and programs evaluation Methods and measures for program participation and outputs
More formally the program’s output can be written : (Rubin’s model)
Denoting Y the output variable T the program participation ( 0 for participation 1 for not participation)
Y1 Y0 - potential results - participation and not participation respectively. They are never observed simultaneously for the same individual. He cannot be in two states at the same time.
Y = T Y1 + (1-T)Y0
In the case of participation Y1, the Y0 represents the counterfactual
Impact or “additionnality”
I = Y1 - Y0
Ex post policy and programs evaluation Methods and measures for program participation and outputs
The problem of the counterfactual:
How to divide the eligible population into treatment ( or intervention group which participates in the program), and control (or comparison group which do not participate.
This is essentially the control group which is difficult to identify – it should be identical to treatment group except from program participation.
In reality, many individual (often unobservable) factors influence the decision to participate.
Ex: The monetary incentive is not the only condition to participate (others – qualification, opportunity costs (distance, domestic production, informal markets availability…)
Thus, choosing a control group for the counterfactual estimation is exposed to a high risk of selectivity bias
Different methods to minimize that risk
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Different methods to minimise that risk
Randomised trials
if not possible
Quasi experimental methods
Before-after design
Difference in differences
One-to one matched comparison group design
Matched area comparison design
Statistical micro econometric modelin
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Randomised trials
« Golden standard »
Eligible population is divided at random into two groups: a program (treatment) group and a control group .
(Like in medical research quasi single blind experiment but not double or « triple » blind) )
Both group are balanced as far as all charcteristcs which can influence the outcome are concerned, except for program participation.
Advantages:
The only observed differences are random differences and the program impact
Difficulties
Moral: the program is refused to the control group
Administrative: high administrative costs managing the selection between participants and non participants (two systems must be run)
Conclusion: very good design but difficult to implement. Very rich administrative data can facilitate the design (no specific survey costs).
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Quasi experimental designs
Before-After design
Used to evaluate programs that are to be introduced nationally
The comparison group is drawn from the eligible population before the program is implemented,
The program group is drawn from the eligible population post- program implementation.
The main disadvantage of the before-after design is that change, or additionality, due to the program can not be separated from change that might naturally occur between any two points in time. Different factors can affect outcomes in different periods (change in labor market conditions)
Different other programs interference possibility.
Conclusion: the most often used, but the identification of particular programs’ effects can be difficult.
Can be improved, if a long time series is available.
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Quasi experimental designs
Ex post micro-simulation
A variant of the previous method (before and after) is the use of the micro simulation model (Constant population structure analysis)
A set of output indicators is built (inequalities, poverty, unemployment, effective marginal and average tax rate…).
The introduced program are applied to the same population sample generating the hypothetical « after » outputs .
The treatment and control (comparison group) are the same and are compared before and after program application.
Problems: there is no control for population structure evolution impact and the influence of economic situation change
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Quasi experimental designs
Matched area comparison design
First: selecting pilot areas to run a new program
Second : these areas are matched to a set of control areas (not necessarily on the one to one basis;
The eligible population is followed up in both areas and the outcomes compared
Problem: controlling for observable or not observable differences in areas
Advantage: no administrative problems when running different programs.
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Quasi experimental designs
One to one matching methods (individuals, groups, areas)
Post program implementation design:
Individuals or more often groups are selected first among participants,
Then the « similar » ones are selected among non participants.
“Similar” means matching the closest possible observable characteristics of interest except from program participation.
This is one-to one matching i.e. to every participating group (individual) another if possible identical is associated from the non participating population.
Main problems: the weaknesses of matching methods especially when many unobservable characteristics influencing program participation or few common characteristics between observations.
.
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Quasi experimental designs
Différence in différences
Two groups are compared before and after program implementation
Two groups are selected from eligible population :
participants (intervention group)
non participants in the program (control or comparison group)
Both groups are observed over the time and outcomes of the variable of interest (for example unemployment) are calculated as differences « before » and « after ».
For « non participants « natural change” is observed,
For participants for intervention group both « natural and program impact change are observed”.
The second difference between change in the treatment and control group evolution gives the estimate of program impact effect.
main hypothesis:« natural evolution is identical for both groups.
Ex post policy and programs evaluation Methods and measures for program participation and outputs
Statistical modeling to estimate the counterfactual
It is a variant of one-to one matching schemes associating an appropriate control group (non-participant in the program) to the treatment group (participants in the program).
If matching is difficult (usually it is) it is interesting to get the non participant group much larger then participants’ group allowing a more precise reliable results when estimating the counterfactual from a a larger data set taking into account a large number of potential candidate for match.
Several matches can be realized among non participants to correspond to one participant observation.
Ex post policy and programs evaluation Methods and measures for program participat
Statistical matching models and estimatorsi
Matching on observable characteristics
The estimation principle:
Use all information available on non all non participants to build for every participant a counterfactuel.
1.Matching estimator on observable characteristics (Rubin 1977).
2.The potential outcome for all non participants is estimated as a prediction based on the same characteristics and real outcomes of the variable of interest (unemployment) for program participants.
3.The set of identical characteristics between participants and non participants can be difficult or even impossible to identify Then it can be replaced the closest possible individuals in sense of a defined distance mesure (Mahalanobis for exemple).
4.The program result is as usual the average difference of outcomes between participant et non participants
Ex post policy and programs evaluation Methods and measures for program participat
Statistical matching models and estimatorsi
Propensity score matching estimation
The estimation principle:
Probability of treatment (participation) is estimated conditionally on the observed individual characteristics.
Then the participants and non participants are matched on the basis of the propensity score proximity.
Propensity score with kernel weighting
The basic idea is that every non treated individual is participating in building of the counterfactual of an treated individual with the weight varying with respect to the propensity score distance between both individuals
Ex post policy and programs evaluation Methods and measures for program participat
Statistical matching models and estimatorsi
The instrumental variable estimator
The estimation principle:
First find a variable correlated with participation (treatment) but not correlated with variables (observed and non observed) related to outcomes Comparing outcomes with this variable gives the information how outcomes relate to participation and allows additionnality estimation.
Problem: difficult to find such a variable; Propensity score is often used.
Heckman selection estimator
Allows the correlation of the instrument with outcome equation errors by explicit estimation of both (instrument and errors). Specification of that relationships depends however on strong hypothesis.
Ex post policy and programs evaluation Final remarks
What are the recommended evaluation schemes
1.Both ex ante and ex post policy evaluations bring an information about programs –reforms perspectives in terms of expected results.
2.The reliability of this information depend on the use of the appropriate models but essentially on the quality of existing or created data sets
3.Ex ante methods treat the general population effects, but need the development in the sense of macro-economic general equilibrium
4.Ex post methods are adapted to treat rather small populations and suffer also from the lack of the general population or macro-economic feedback