I’m preparing my new course on Economics for Public Policy that I start teaching at the University of Manchester in a few weeks, and one of the things preoccupying me as I look over the specific material is the evaluation question. Of course impact assessments are a big deal now, and randomised control trials (disguised as ‘pilots’ in the developed world context) very fashionable. Looking at whether policy interventions actually achieve what they were meant to is of course important; and the answer is usually ‘no’ as a host of recent books (The Blunders of Our Governments by Anthony King and Ivor Crew, Why Government Fails So Often by Peter Schuck, Government Failure vs Market Failure by Clifford Winston, Wrong by Richard Grossman) amply testify. But I’ve been thinking more about what the policies are meant to achieve in the first place, the underlying social welfare justification. I started mulling this over when writing last year’s Pro Bono Economics Lecture, The Economist as Outsider, and the philosophical basis of the standard approach in economic policy – identify the market failure and the corresponding Pigouvian intervention – seems profoundly flawed the more you think about it. The recent excellent Interfluidity blog posts on welfare economics spell out some of the issues.
That’s a subject for another day, possibly another book. Meanwhile, I just read The Arrow Impossibility Theorem, lectures by Eric Maskin and Amartya Sen. It’s not an easy read, but it does make the Impossibility Theorem as simple as can be – pretty much equation-free, and clearly explained by two of the biggest brains in the business. Maskin’s lecture looks at the implications for voting systems, Sen’s at the informational basis on which one can make social welfare assessments. The book is an excellent one stop shop on the Impossibility Theorem. Useful for teaching it, and also an important reminder to economists who talk about or operate in the policy world that this question of social welfare is difficult and important.