Exploring the importance of behavioural endogeneity for policy projections

Justin van de Ven

No 479, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research

Abstract: Behavioural endogeneity is appealing functionality for any analytical tool designed to explore the implications of public policy alternatives. This study improves the evidence base for choosing between alter- native approaches for projecting decision making by exploring two key research questions: (i) how important are the impact effects of policy change, relative to associated incentive effects; and (ii) to what extent can the over-all infTuence of behavioural responses to policy change be approximated by labour supply responses alone? Results obtained highlight the importance of selecting an analytical tool that is tailored to the subject of interest, and provide support for the view that best-practice evaluation of policy counterfactuals should consider the sensi- tivity of key results to alternative analytical approaches.

Keywords: dynamic microsimulation; policy evaluation; savings behaviour; labour supply (search for similar items in EconPapers)
JEL-codes: C51 C61 C63 H31 (search for similar items in EconPapers)
Date: 2017-08
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Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:479

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