An Executive Perspective on Open Data and Evidence-Based Policymaking

Evidence-Based Policymaking

An Executive Perspective on Open Data and Evidence-Based Policymaking

The following comments were adapted from the RegTech Data Summit Keynote Address of Ben Harris, Chief Economist, Results for America – Former Chief Economist and Economic Advisor to Vice President Joe Biden. Delivered April 23, 2019 in New York City.

In a time of seemingly insurmountable partisanship, Congress was able to come together around the issue of evidence-based policy and pass the Foundations for Evidence-Based Policymaking Act (Evidence Act) that makes some dramatic changes to our ability to learn from data and evidence in our quest for better policy. As many of you may know, the OPEN Government Data Act—which was included in the Evidence Act—implements some remarkable changes, including:

  • Installing Chief Data Officers at all federal agencies
  • Documenting and coordinating the massive breath of data collected by agencies; and
  • Directing that non-sensitive government data be open by default.

To start, it’s probably worthwhile to acknowledge that issues like data standardization and calls for access to open data might not be the sexiest topics, but we all can appreciate their importance.

As a newcomer to this topic, I have only begun to understand and appreciate the need for widespread access to standardized, machine-readable data.

The need for standardized and accessible data is crucial, but also the critical need to inject more evidence-based policy into our system of legislation and regulation.

I have come to believe that our whole economy, not just government regulators, face a massive information deficit. Our economy, which now runs on data and information more than ever, still has gaping holes in the availability of information that undermines markets and can lead to widely inefficient outcomes.

When it comes to evidence-based policymaking, our government has a long way to go. As pointed out in a 2013 op-ed in The Atlantic by Peter Orszag and John Bridgeland, only about one percent of our federal dollars are allocated based on evidence and evaluations. From my perspective, this is about ninety-nine percentage points too few.

The lack of evaluation can inject massive and longstanding inefficacies into our federal, state, and city-level budgets resulting in wasteful spending and missed opportunities to improve lives. This is never more evident than in our country’s $1.5 trillion tax expenditure budget. We have hardly stopped to ask whether the $1.5 trillion spent annually in targeted tax breaks are achieving their desired objectives.

The benefits of better evidence and data extend well-beyond direct spending and tax administration. It can mitigate the economic pain caused by a recession. Indeed, the severity of the financial crisis was exacerbated by the information deficit in the wake of Lehman’s collapse and the inevitable chaos that followed. Had financial firms and regulators been able to more accurately and quickly assess the extent of the damage through standardized financial data, we would have seen less radical actions by investors to withdraw from credit risk and more effective government intervention. Of all the factors that played a role in the crisis, I don’t think it’s hyperbole to say that lack of data standardization is perhaps the least appreciated.

Evidence-based policy is also not just a matter of better government. It’s about people’s faith in government in the first place. Results for America recently commissioned a nationally representative survey about Americans’ attitudes about the role of evidence in policymaking. When asked about “what most drives policymakers’ decisions” a whopping forty-two percent said “boosting popularity, or getting votes” while thirty-four percent said it was the influence of lobbyists and just eight percent said it was evidence about what works. Surely these responses are cause for concern.

Fortunately, there are solutions.

To start, in a time when there are seemingly no bipartisan bills, we saw the passage of the Evidence Act—which is known to some as the umbrella bill for the OPEN Government Data Act. As I noted at the beginning, the Evidence Act represents a major step forward not just for the capacity of government agencies to implement evidence-based policy, but for the public to gain access to open, machine-readable data.

Of course, this law is the beginning, not the end. We can help solve private market inefficiencies by calling for more data.

  • When it comes to better understanding the fees charged by financial advisers, the U.S. Securities and Exchange Commission (SEC) can amend Form-ADV to include explicit questions on fees charged. It’s that simple.
  • When it comes to evaluating government programs, I can think of no more powerful tool than providing federal agencies a 1 percent set-aside for evaluation. Results for America has called for this for years, and it’s time that Congress pick up the charge.
  • When it comes to evaluating the $1.5 trillion tax expenditure budget, we’ll have to make some institutional changes. One option is to expand the capacity of a federal entity, like the Internal Revenue Service (IRS) or the White House Office of Management and Budget (OMB), to include periodic evaluations of this budget. Another is to call for regular Congressional approval, similar to the process for appropriations.
  • And as we prepare for the possibility of the next recession, we also need to finish the progress made in earnest to make adoption of Legal Entity Identifiers (or LEIs) ubiquitous across the financial sector. While the progress since the great recession has been impressive, we have more work to do to ensure this system covers not only entities in the U.S., but our economic allies as well.

These reforms can and should be viewed as steps to aid the private sector, hopefully leading to better economic outcomes, lessened regulatory burdens, or both.

On the whole, I am clear-eyed about the challenges faced by advocates for evidence-based policy. The passage of the Evidence Act it is clear that progress can be made. To me, it feels like we are on the cusp of a new movement to incorporate data and evidence in all that government does. Together we can help ensure that policy does a better job of incorporating data and evidence, leading to improved lives for all Americans.