Policy Evaluation

How can we tell whether a policy actually works? How do we know whether an observed change was caused by the policy rather than by something else? And how can we compare benefits and costs when important outcomes, such as cleaner air or better health, do not have market prices?This course develops the empirical tools economists use to answer these questions. It combines two central areas of applied economics: measuring the value of non-market goods and estimating the causal effects of policies and interventions.The first part introduces stated-preference methods, in particular the Contingent Valuation Method (CVM), and shows how they can be used in cost-benefit analysis. The second part focuses on causal policy evaluation using experimental and register data, with particular emphasis on randomized experiments and difference-in-differences. The methods are illustrated through applications from different areas of economics.Throughout, the emphasis is on practical empirical reasoning: Which method fits the question? What data and variation can be used to answer it? What assumptions are needed? And how convincing is the evidence?Together, these tools address two fundamental questions in applied policy analysis: What effects does a policy have? And are the benefits worth the costs?NEK307 is a 7.5-credit advanced undergraduate course in Economics, taught in English and offered in Period 1. It can be taken as an elective course in the Bachelor's programme in Economics.