Policy Evaluation and Analysis Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Policy Evaluation and Analysis flashcards as text
Which evaluation design is considered the 'gold standard' for establishing causal policy impact?
Answer: Randomized controlled trial
Randomized controlled trials randomly assign units to treatment and control groups, eliminating selection bias and establishing true causal inference.
A regression discontinuity design (RDD) identifies causal effects by exploiting:
Answer: A threshold rule that determines treatment eligibility
RDD compares outcomes for units just above and just below a cutoff threshold, treating assignment near the threshold as quasi-random.
In cost-benefit analysis, the 'shadow price' of a non-marketed good refers to:
Answer: The implicit value derived from revealed or stated preferences
Shadow prices capture the social opportunity cost or willingness to pay for goods without observable market prices, using revealed or stated preference methods.
The 'displacement effect' in program evaluation refers to:
Answer: Program benefits crowding out private-sector activity
Displacement occurs when subsidized jobs or activity simply replace unsubsidized equivalents, reducing net social gain from the program.
Which of the following best describes an 'instrumental variable' in policy evaluation?
Answer: A variable correlated with treatment but not directly with the outcome
An instrument is correlated with the endogenous treatment variable but affects the outcome only through its effect on treatment, satisfying the exclusion restriction.
When evaluating a job-training program, the 'Ashenfelter's dip' phenomenon implies:
Answer: Pre-program earnings of participants temporarily decline, biasing naïve comparisons
Ashenfelter's dip is the pre-enrollment earnings decline that attracts participants to training programs, making simple before-after comparisons overstate program impacts.
The 'intention-to-treat' (ITT) estimate in a randomized evaluation measures:
Answer: The effect of being assigned to treatment regardless of actual take-up
ITT compares average outcomes by assignment status, preserving randomization validity even when some assignees do not take up the treatment.