Policy analytics need more than a spreadsheet: a case study in funding formulae

Paul Hewson (), Joyce Halliday, Alex Gibson and Sheena Asthana
Additional contact information
Paul Hewson: Plymouth University
Joyce Halliday: Plymouth University
Alex Gibson: Plymouth University
Sheena Asthana: Plymouth University

Annals of Operations Research, 2016, vol. 236, issue 1, No 11, 215-232

Abstract: Abstract This article presents two case studies, concerning the allocation of £Billions by a mechanism communicated via spreadsheet models. It argues that technical analytic skills as well as policy development skills are a vital component of governance. In the UK, Central Government uses funding formulae to distribute money to local service providers. One commonly stated goal of such formulae is equity of service provision. However, given the complexity of public services, together with variations in need, delivery style and the exercise of stakeholder judgement as to which needs should be met and how, such formulae frequently obscure the process by which equity has been taken into account. One policy ‘solution’ to managing such tensions is to seek ‘transparency’. With respect to funding formulae, this commonly involves publishing the underlying data and formulae in spreadsheets. This paper extends the argument that such ‘transparency’ requires an audience that understands the policy assumptions (and related conceptualisations), data sources, methodological approaches and interpretation of results. It demonstrates how the search for policy ‘transparency’ is also met by the technical quality assurance goals that the operational research community would recognise as best practice in the development both of software generally and spreadsheet models specifically. Illustrative examples of complex formulae acting to subvert equity are drawn from the English Fire and Rescue Service and Police Service allocation formulae. In the former, an increase in the amount of deprivation, as measured by one of six indicators, has the perverse effect of decreasing the financial allocation. In the latter, metropolitan areas such as London are found to gain most from the inclusion of variables measuring sparsity. The conclusion from these scenarios is that the steps needed to for technical quality assurance and policy transparency are mutually reinforcing goals, with policy analysts urged to make greater use of technical analytic skills in software development.

Keywords: Funding formula; Spreadsheet errors; Transparency; Software development methodology (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-013-1475-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:236:y:2016:i:1:d:10.1007_s10479-013-1475-4

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-013-1475-4

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().