Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 24 March 2016

Is evidence based policy left wing?

The answer in principle is of course not. In practice, not so clear. This is something I talked about back in October 2013, and there are no signs that things are getting better. Alex Marsh makes the same point in the context of the latest budget. This antagonism to ‘unhelpful’ evidence is out there in plain sight for all to see in the UK government’s current attempt to deny academics in receipt of public funding the ability to talk about the policy implications of their work. I talked about this in terms of the misuse of the term ‘public money’ a few weeks ago, but it is also a pretty direct attempt to suppress unhelpful advice. (Note that ministers have the power under this proposed legislation to revoke this ban in individual cases, presumably when evidence is ‘helpful’ - to them.)

Of course we are not talking about a hostility to evidence based policy by everyone on the right on all occasions. In a THE article by Ben Goldacre, where he also highlights the dangers of the government’s proposed legislation, he details the extent to which he is talking to ministers about evidence based policy. But that interest does not seem to extend to big macro decisions. I was reminded in reading this about what I regard as a triumph of evidence based policy making in my own area: the UK Treasury analysis of Euro entry in 2003. (Disclaimer: my little contribution is the fourth one down in the picture of the reports.) Why didn’t this government do something similar for both the Scottish referendum and the EU referendum?

Everytime I mention the 2003 exercise someone responds that it was just a smokescreen for a power play between Brown and Blair. I think this is an overly cynical view, a view that evidence never changes anyone’s mind. Ramsden’s own view is that the civil service, using the evidence, “ultimately persuaded both the Chancellor and in particular the Prime Minister that it wasn't right to join." It was also the right decision. With both recent referendums we have seen proponents of change putting out documents suggesting that change will not be economically damaging, when most evidence shows pretty clearly that it will be. With the EU referendum in particular, would it not have been better if the government had asked the Treasury to do a similar exercise to 2003, using outside experts where appropriate to provide or validate the technical analysis?

Ben Goldacre’s piece reminded me of my own recent place on John McDonnell’s Economic Advisory Council (EAC). From Ben’s tweets I knew that he was not the greatest fan of this government, and in particular their current treatment of junior doctors, so I asked him whether he had received any negative comments from doctors or others about him giving advice to the government. I was not surprised to hear he had not. Who could object to him taking the opportunity to argue for better use of data and trials in medicine and elsewhere with people who just might do something about it?

It is a shame that some people did not take the same view when I agreed to be on the EAC. I would lose credibility as a macroeconomist, I was told. When McDonnell did his U-turn about supporting the fiscal charter, some suggested this reflected badly on me, even though he had turned in the direction I thought was correct! One charge in particular was levelled at the time. We were being used to make the leadership look respectable, but our advice would in practice be ignored. A couple of weeks ago Labour adopted a fiscal rule which is based on my own work with Jonathan Portes, and in particular by a presentation I made to the group. Mariana Mazzucato’s own work has also featured strongly in Labour party speeches, with good reason.

At the end of the day, policy makers need to look at evidence. If they do not we need strong mechanisms that allow them to be confronted by this evidence. Policy makers that make space for evidence and take decisions based on it need to be congratulated for this, rather than being told their efforts were just a smokescreen. They should be congratulated because letting evidence in often involves a risk: not just to the policy maker’s priors or preferences but also for scrutiny of past actions. Equally we should regard policymakers who knowingly ignore evidence with great suspicion, and those that try to deliberately keep evidence out of the public domain should be condemned.




10 comments:

  1. Charles Orton-Jones24 March 2016 at 03:52

    Simon you say: "One charge in particular was levelled at the time. We were being used to make the leadership look respectable, but our advice would in practice be ignored."

    This article sounds worryingly like confirming you think you were right to join the EAC. At which point people who admire you need to start sounding the warning klaxons.

    Every scrap of evidence says the current leaders of the Labour party are fanatically opposed to evidence in economics. Take Venezuela. It has been the world's worst run economy in the past decade, after North Korea and Zimbabwe, resulting in it having three of the ten most violent cities in the world. It's a catastrophe.

    Corbyn said in 2015 to the Venezuelan Solidarity Campaign:

    “When we celebrate, and it is a cause for celebration, the achievements of Venezuela, in jobs, in housing , in health, in education, but above all its role in the whole world as a completely different place, then we do that because we recognise what they have achieved.”

    Or take John McDonnell's statements on Marxism.

    The EAC isn't there to fine-tune a free-market set of policies (you know, the sort of thing that made Sweden, Canada, Hong Kong and Japan so rich). It's to usher in a Chavista re-organisation of the economy.

    Just because the Labour leadership has temorarily agreed to listen to you on a couple of [well made] points does not void their entire history of ensorsing a Marxist-derived anti-capitalism.

    The current Labour leadership fanatically opposed to "neo-liberalism" or capitalism, or whatever you want to call it. It's their life's work. That is why umpteen centrist Labour MPs (Rachel Reeves, Jonathan Reynolds, Chuka Umunna) refuse to work with Corbyn and Co.

    Right now Corbyn is trying to stay in the Overton Window. Yes, he'll try and appear moderate. If elected, he won't stay there. He'll impose his own flavour of socialism on the economy.

    "Evidence based" was the theme of this blog. Next time you have the chance ask Corbyn and McDonnell about Venezuela. Then, please, report back to us with their answers.

    ReplyDelete
    Replies
    1. And how exactly will he "impose his own flavour of socialism on the economy" once elected? This is pure fantasy, worthy of the Daily Mail or Sun.

      Delete
    2. The interesting thing is that Corbyn is far, far outside the 'window' of media respectability, despite not having proposed anything remotely resembling socialism - or anything that doesn't have widespread support in the country.

      In any case, equating (opposing) neo-liberalism with (opposing) capitalism is obfuscatory. A state with nationalised coal and steel industries - to say nothing of utilities, public transport, health, education etc - would be anything but neo-liberal, but it would still be a capitalist state; I know, I grew up in one*. The most that Corbyn & McDonnell can hope to achieve in their political lifetime is a less neo-liberal capitalist economy.

      Of course, at some point in the future it may not be possible to propose a less neo-liberal policy which isn't also counter-productive for medium-term economic growth, and at that point I would expect SWL (and others) to jump ship and leave the tankies to their own devices. But we're not there yet by some distance.

      *Britain, in case anyone was wondering. Fun fact: the SDP's 1983 manifesto proposed leaving coal, steel, gas and electricity in public ownership.

      Delete
  2. Does the National Infrastructure Commission not provide the Government with evidence based policy?

    ReplyDelete
    Replies
    1. It does - wonder where he got this good idea from?

      http://www.mirror.co.uk/news/uk-news/george-osborne-steals-labours-infrastructure-6576368

      Delete
  3. And what about policy-based evidence-making (a la much of Public health)?

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  4. More physics envy.

    Need I mention relativism, and that economics is not the yardstick to measure every decision.

    Many would consider the sovereignty issue more important than the economics. Also the immediate disruption may result in a short-term loss, but a medium term gain, justifying the loss.

    Facts are not enough, because embedded in complex facts are value judgments. The acceleration due to gravity is constant (physics), the consequences of leaving the EU are not, and may depend on our future behavior which the EU constrains.

    With the EU rules on monetary and fiscal policy (e.g. article 123 of the Lisbon Treaty), beyond just the Euro.

    If we wore part of the Euro, would that change the calculations on leaving the EU?

    What if the EU signs up to TTIP? and Britain wishes not to (Joe Stiglitz advice would be to leave), or the consequences of free-movement, Turkey's membership of the EU.

    I am glad you have a definitive answer, but it is not the evidence you choose, that determines how each individual will vote or what is the correct outcome.

    https://www.rt.com/uk/334409-brexit-ttip-stiglitz-eu/



    ReplyDelete
  5. Wise words, however we must be wary of some of the evidence economists give us. A good example was the forecast and effects of A8 immigration which relied on an econometric model. Little effort was made to go out and find what the intentions of people in the Eastern bloc were; if you did you would very quickly find out there was going to be a major exodus. Dustman and I believe Portes were involved with this. First they said few would come, then when they did come we were told they would go, and then when they were clearly staying and continuing arrive, we were told that the effects on low skilled workers and potential workers from low income or non-salaried households was and would continue to be negligible. This is the sort of thing that creates cynicism towards the political establishment and plays to the far right parties.

    Also mainstream economists were very much pushing free trade and free capital flows (including light touch regulation for the City) for at least the last 30 years. It was sociologists and historians who were really going out and looking into what the effects of these policies were. The picture painted is one of winners and losers, not the benign picture that was continually painted by mainstream economists.

    Why am I mentioning this? Because it is important not to keep defending New Labour, even if they did what mainstream economists told them. New Labour let people down, particularly the people they are supposed to represent. It created millions of jobs, sure, but those jobs did not end up going to the long unemployed of this country. The Great Moderation was a squandered opportunity to deal with deep seated economic and social problems. In the end Labour's policies served the Financial Sector and the one percent. That the financial crisis was not caused by government deficits is not the issue at all. It is what they did or did not do during the Great Moderation which is where the problem lies.

    Therefore Labour should not look back to New Labour. It must get behind Corbyn.

    ReplyDelete
    Replies
    1. Evidence can be wrong. How do we know? When we get more evidence.

      Evidence often conflicts with other evidence, so for that any many other reasons it cannot be the only criteria for decision making. But it should be heard.

      You are surely not implying that Corbyn will take less notice of evidence than New Labour?!

      Delete
  6. Academics’ voting proportions in elections of 1964, 1976, 1987, 2005; for Tory 32%, 29%, 18%, 10%; for Labour 43%, 40%, 37%, 41%; for Liberal Democrats 2005 44% (taken from the TES and cited in Robert Anderson, British Universities (2006)).

    A similar percentage of US academics vote for the Republican Party as happens in the UK for the Tory Party.

    ReplyDelete

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