Is Economics Useful for Public Policy?

James Alm ()

No 20304, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: Economists have always played an important role in major public policy debates. Even so, I believe that the role of economists in these public policy discussions has often been misguided because it has typically relied upon “best practices,” stated in the form of “general guidelines” or even “universal principles.” However, “best practices” are not best if the specific situation does not conform with the assumptions that underlie the advice. So my first conclusion is a cautionary, and negative, one: Specific circumstances differ so profoundly across individuals, firms, markets, countries, and time that most any attempt to define “best practices” that apply in all circumstances will lead to profoundly misleading public policy recommendations. However, even if economics cannot identify “the” truth, it can often identify “a” truth. So my second conclusion is a more positive one: Economists should continue to develop multiple theories that inform public policies, but we should also focus our efforts on identifying and testing the critical assumptions that drive the results of these theories, recognizing that the validity of any assumptions will depend intimately on specific circumstances. I illustrate these two main conclusions with specific examples from my own work. I conclude with some “best practices” recommendations of my own, recognizing the obvious irony of such an effort.

Keywords: Public policy; Economics; Income tax (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ir.wgtn.ac.nz/handle/123456789/20304

Related works:
Journal Article: Is Economics Useful for Public Policy? (2017)
Working Paper: Is Economics Useful for Public Policy? (2017)
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:vuw:vuwcpf:20304

Access Statistics for this paper

More papers in Working Paper Series from Victoria University of Wellington, Chair in Public Finance School of Accounting & Commercial Law, Victoria University of Wellington, PO Box 600, Wellington, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Library Technology Services ().