Updates from Chicago Booth

Purely evidence-based policy doesn’t exist
By Lars Peter Hansen – Recently, I was reminded of the commonly used slogan “evidence-based policy.”

Except for pure marketing purposes, I find this terminology to be a misnomer, a misleading portrayal of academic discourse and the advancement of understanding. While we want to embrace evidence, the evidence seldom speaks for itself; typically, it requires a modeling or conceptual framework for interpretation.

Put another way, economists—and everyone else—need two things to draw a conclusion: data, and some way of making sense of the data.

That’s where modeling comes in. Modeling is used not only to aid our basic understanding of phenomena, but also to capture how we view any implied trade-offs for social well-being. The latter plays a pivotal role when our aim is to use evidence in policy design.

This is intuitive if you think about the broad range of ideas and recommendations surrounding macroeconomic policy and the spirited, sometimes acrimonious way in which they’re debated.

If everything were truly evidence based, to the extent we can agree on the accuracy of the evidence, why would there be such heterogeneity of opinion? The disagreement stems from the fact that people are using different models or conceptual frameworks, each with its own policy implications.

Each of them might be guided by evidence, but policy conclusions can rarely be drawn directly from the evidence itself. more>

Related>

READ  Boeing Dreamliner cleared to fix battery, start flying again

Leave a Reply

Your email address will not be published. Required fields are marked *