Sunday, 28 February 2010

The case for an informed policy debate

   Many believe public policy debate in Portugal needs improvement, lacking streamlined arguments and compelling evidence to support theviews. Or, at least, that is my perception.
   When a particular policy is under scrutiny, arguments are seldom justified, often driven by beliefs and dogmas, frequently (thepublic suspects) by personal interests. Most likely than not, claims are not supported by numbers highlighting costs or benefits to the public purse or economic agents, even if only from an accounting perspective. Theoretical arguments that may rationalise the decision are typically out of the way. And empirical evidence showing the need for the intervention, shedding light on agents' related behaviour or disclosing some policy effects are absent.
   The intriguing fact is that such attraction to vague, ungrounded discussion seems to spread to policy makers and commentators alike. As a consequence, moral stand, common sense and personal preferences are the most likely factors determining one's inclination towards one faction or another. Rarely are informed discussions about the desirability and consequences of a policy part of the equation.
   So the question is, why is this the case?
   Among many potential reasons, at the top of my list is the absence of a crucial party in policy debate: an independent organisation that systematically looks at public policy, studies how it works and its potential effects within the circumstances of the moment, and is willing to inform public debate with timely contributions. In the field of economics, we would be looking for rigorous, unbiased economic analysis, grounded on substantive empirical evidence on agents' behaviour, the incentives and restrictions they face, and based on an in-depth knowledge of the institutional features of the Portuguese economy.
   There are few examples of such organizations across Europe. The one I know best is the UK Institute for Fiscal Studies (Sweden has IFAU for labour market policy research and Spain has now the SpanishInstituto de Estudios Fiscales, with slightly different goals). My impression is that the quality of public discussion on policy issues is very positively affected by their presence. Not only are the arguments of the different sides examined in some detail, a considerable amount of extra information is also brought into the discussion.
   So the next question arises: why is such organisation still not there?
   My tentative response is lack resources and incentives. Such organisation is necessarily research oriented since it needs to select and address the interesting and feasible questions soundly while training members in the latest developments in policy analysis. The lack of incentives and long-term funding for (academic) research affects the composition of the research community in Portugal, its attractiveness in an international perspective and the sustainability of research projects requiring a long-lasting horizon.


  1. I would add to the inhibiting factors the inability of Portuguese sponsors of putting money into research without conditioning ex-ante the results.

    Some hope exists for the new foundation Francisco Manuel dos Santos, run by António Barreto, it may well develop to that sort of institution

  2. Totally agree, both with Monica and Pedro.
    Still, it is worthwhile pointing out that we have done some improvements in the last few years. In terms of public finances, the recently-created Unidade Técnica de Apoio Orçamental (UTAO) da Assembleia da República and the Tribunal de Contas have done very important work in checking the quality of our public finances. What we now need is to guarantee that these institutions continue their excellent work, and that more organizations of these sort flourish in Portugal

  3. I've been following this Blog for a few days now and I must say, its good to see a group of Portuguese economists, both at home and abroad discussing the status of the national economy in such a relatively light language without resorting heavily to numbers and calculations.

    It makes its content available to a far greater audience while not jeopardizing its value as a "experts-point of view" source.

    To prove my point above, I've been interested in this area of science for some years (and I'm only 17 years old for that matter), yet apart from personal discussions and relatively few information of the kind you provide, its hard not to be overwhelmed at first without knowing the basics. What you provide here is an excellent wealth of data and opinions that can be learned and appreciate by just about anyone, from someone who wants to follow a career in Economics (like me) or just a casual citizen who cares about his surroundings.

    A great initiative!