Chapter 2: Predicting and Monetizing Impacts Flashcards
How do we predict Impacts?
The primary basis for prediction is what has happened in the past and by predicting impacts relative to the status quo.
3 Types of errors predicting impacts
- Omission Error
- Forecasting error
- Valuation error
5 Ways to get predictions?
- Predict Using Data from an On-Going Policy
- Predict Based on Single Evaluation of a Similar Policy
- Predictions Based on Meta-Analyses of Similar Policies
- Predict Using Generic Elasticities
- Guesstimate
Meta-analysis
A meta-analysis seeks to use the information in the studies to find an effect size and its variation
3 elements of meta-analyses
- Identification of relevant evaluations.
- Application of a standardized measure of size effect to facilitate comparisons across studies.
- Computation of an overall effect and its standard deviation.
How to predict based on single evaluation?
- Does the policy have the same underlying model?
- How closely do the details of the policies conform?
- What is the quality of the evaluation of the similar policy?
How to predict based on on-going policy?
The best basis for prediction usually comes from inferences drawn from an experimental design with random assignment of subjects into treatment and control groups.
How to predict based on generic elasticity?
When we cannot find relevant evaluations of the policy itself, it may be possible to predict impacts using elasticities. A way is to search in the general economics literature and/or the specialized literatures to find empirical estimates of elasticities.
How to guesstimate?
Sometimes, we cannot find any quantitative evidence to help predict an impact.
- You will have to turn to logic and theory to identify a plausible range of value.
- Advice from experts
Monetizing
Evaluate impacts in terms of a common currency.
Shadow Pricing
Monetizing impacts in missing markets by estimating prices based on research ie. The value of life
