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Knowing What Works: The Case for Rigorous Program Evaluation


  • Schmidt, Christoph M.

    () (RWI)


Since interventions by the public sector generally commit substantial societal resources, the evaluation of effects and costs of policy interventions is imperative. This paper outlines why program evaluation should follow well-respected scientific standards and why it should be performed by independent researchers. Moreover, it outlines the three fundamental elements of evaluation research, the choice of the appropriate outcome measure, the assessment of the direct and indirect cost associated with the intervention, and the attribution of effects to underlying causes. The paper proceeds to outline in intuitive terms that the construction of a credible counterfactual situation is at the heart of the formal statistical evaluation problem. It introduces several approaches, based on both experiments and on non-experimental data, that have been proposed in the literature to solve the evaluation problem, and illustrates them numerically.

Suggested Citation

  • Schmidt, Christoph M., 1999. "Knowing What Works: The Case for Rigorous Program Evaluation," IZA Discussion Papers 77, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp77

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    References listed on IDEAS

    1. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
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    6. Rodrik, Dani, 1986. "Tariffs, subsidies, and welfare with endogenous policy," Journal of International Economics, Elsevier, vol. 21(3-4), pages 285-299, November.
    7. Oren M. Levin-Waldman, 1998. "Exploring the Politics of the Minimum Wage," Macroeconomics 9805010, EconWPA.
    8. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-942, July.
    9. Appelbaum, Elie & Katz, Eliakim, 1987. "Seeking Rents by Setting Rents: The Political Economy of Rent Seeking," Economic Journal, Royal Economic Society, vol. 97(387), pages 685-699, September.
    10. Rama, Martin, 1997. "Imperfect Rent Dissipation with Unionized Labor," Public Choice, Springer, vol. 93(1-2), pages 55-75, October.
    11. Rama, Martin & Tabellim, Guido, 1998. "Lobbying by capital and labor over trade and labor market policies," European Economic Review, Elsevier, vol. 42(7), pages 1295-1316, July.
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    More about this item


    counterfactual; observational studies; Experiments;

    JEL classification:

    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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