公共政策的经济分析Chap02.ppt

1、1,Chapter 2 Tools of Positive Analysis,2,Policy analysis is hard,Why is it so hard to tell whats going on with government actions? Consider lowering income tax rates. Will lowering taxes increase work effort and labor supply? Unlike the physical and natural sciences, difficult to perform carefully c

2、ontrolled experiments on the economy. Oftentimes, there is no “control group” or “comparison group” for a policy.,3,Alternatives to an experiment,Use of statistical tools to study impact of public policies. Will use the debate over the effect of taxes on labor supply to illustrate how positive analy

3、sis is done in public finance.,4,Role of economic theory,Consider analyzing Table 2.1 As marginal tax rates have increased, average weekly hours have decreased from 1955 to 2001. Can we conclusively say that taxes have depressed labor supply? No. Nonlabor income rose (dividends, interest) Attitudes

4、may have changed,Table 2.1,6,Role of economic theory,In reality, an unlimited number of factors change over time, and could affect labor supply. Economic theory helps isolate a small set of variables that are important influences on behavior.,7,Role of economic theory,Theory would suggest that perso

5、n maximizes utility - and would include factors like the persons own wage rate. Theory is often too simple may ignore important considerations. But whole point of model building is to reduce a problem to its essentials.,8,Role of economic theory,In this labor supply case, the after-tax wage changes

6、with the policy. Theory predicts that the effect on hours is ambiguous. The substitution effect predicts that as the wage (price of leisure) falls, consumers substitute toward leisure. The income effect says that if leisure is a normal good, consumers consume less of it as income falls. Only empiric

7、al work analysis based on observation as opposed to theory can answer this question.,9,Methods of Empirical Analysis,There are three main methods: Interviews Experiments Econometric studies,10,Methods of Empirical Analysis,Interviews Most straightforward way to find out whether a policy will affect

8、behavior is to ask. Reporters often do this. Pitfalls of interviews The fact that people say something about their behavior does not make it true. People may be embarrassed about the subject, or have other “agendas.”,11,Methods of Empirical Analysis,Experiments Although difficult, it is not impossib

9、le to run policy experiments. Requires random assignment. Pitfalls of experiments Selection issues, even if initial random assignment. Subjects know they are in experiment. Cost.,12,Methods of Empirical Analysis,Experiments some economic theories are testing in laboratory settings, often with colleg

10、e students. Similar approach as used by psychologists. Usually offer different rewards. Setting is artificial, however. College students not really representative of population as whole.,13,Methods of Empirical Analysis,Econometrics statistical analysis of data. Effects of policies are inferred from

11、 the analysis of observed behavior.,14,Methods of Empirical Analysis,Choose specific algebraic form to summarize the relationship. For instance:,Where L is hours worked, wn is the net wage, and A, X1, and X2 are other factors that affect work. 0- 4 are the parameters, and is a random error.,Figure 2

12、.1,16,Methods of Empirical Analysis,Ignoring all of the other factors except for the wage rate, the goal is to fit a line through these data points. No straight line can fit through them, but the purpose of multiple regression analysis is to find the parameters that has the “best fit.” The slope of

13、such a regression line gives the regression coefficient on the wage rate.,17,Methods of Empirical Analysis,When 1=0, the net wage has no impact on hours worked. When 10, the net wage increases work. Substitution effect dominates. When 10, the net wage decreases work. Income effect dominates. Presenc

14、e of random error reflects influences on labor supply that are unobservable to the investigator.,18,Methods of Empirical Analysis,In practice, method does not always lead to conclusive results. After 1 is estimated, its reliability must be considered. Is it “close” to the truth? The standard error i

15、ndicates how much the estimated parameter can vary from its true value, and when the standard error is small in relation to the estimated parameter, the coefficient is statistically significant.,19,Methods of Empirical Analysis,Pitfalls of econometric analysis Heterogeneity across groups Changes in parameters over time Omitted variables bias Some variables, such as “motivation,” are i