Equilibrium Policy Experiments and the Evaluation of Social Programs

Jeremy Lise, Shannon Seitz () and Jeffrey Smith

No 10283, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper makes three primary contributions. First, we demonstrate the usefulness of general equilibrium models as tools with which to draw policy implications for policies implemented in practice only as small-scale social experiments. Second, we illustrate the usefulness of social experiments as a tool to evaluate equilibrium models. In particular, we calibrate our model using only data on an experimental control group and from general data sets, and then use it to predict (in partial equilibrium) the outcomes experienced by an experimental treatment group. We find that it predicts these outcomes remarkably well. Third, we apply our methodology to the evaluation of the Canadian Self-Sufficiency Project (SSP), a policy providing generous financial incentives for Income Assistance (IA) recipients to obtain stable employment. This policy is similar to many other policies designed to 'make work pay' currently under debate or in place in the US, the UK and elsewhere. Our results reveal several important feedback effects associated with the SSP policy; taken together, these feedback effects reverse the cost-benefit conclusions implied by the partial equilibrium experimental evaluation.

JEL-codes: I38 J2 (search for similar items in EconPapers)
Date: 2004-02
New Economics Papers: this item is included in nep-dge and nep-edu
Note: LS PE
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Citations: View citations in EconPapers (79)

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Related works:
Working Paper: Equilibrium Policy Experiments And The Evaluation Of Social Programs (2005)
Working Paper: Equilibrium Policy Experiments and the Evaluation of Social Programs (2003)
Working Paper: Equilibrium Policy Experiments And The Evaluation Of Social Programs (2003)
Working Paper: Equilibrium Policy Experiments and the Evaluation of Social Programs (2003)
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