A Unified Welfare Analysis of Government Policies*
Abstract We conduct a comparative welfare analysis of 133 historical policy changes over the past half-century in the United States, focusing on policies in social insurance, education and job training, taxes and cash transfers, and in-kind transfers. For each policy, we use existing causal estimates to calculate the benefit that each policy provides its recipients (measured as their willingness to pay) and the policy’s net cost, inclusive of long-term effects on the government’s budget. We divide the willingness to pay by the net cost to the government to form each policy’s Marginal Value of Public Funds, or its MVPF''. Comparing MVPFs across policies provides a unified method of assessing their effect on social welfare. Our results suggest that direct investments in low-income children’s health and education have historically had the highest MVPFs, on average exceeding 5. Many such policies have paid for themselves as the government recouped the cost of their initial expenditures through additional taxes collected and reduced transfers. We find large MVPFs for education and health policies among children of all ages, rather than observing diminishing marginal returns throughout childhood. We find smaller MVPFs for policies targeting adults, generally between 0.5 and 2. Expenditures on adults have exceeded more »
Authors:
;
Award ID(s):
Publication Date:
NSF-PAR ID:
10237586
Journal Name:
The Quarterly Journal of Economics
Volume:
135
Issue:
3
Page Range or eLocation-ID:
1209 to 1318
ISSN:
0033-5533
We estimate the climate value of offshore wind energy with a highly flexible, forward-looking method that estimates the value in a consistent manner under a range of policies, including carbon caps and taxes. Backward looking methods measure the damages avoided due to emissions reductions attributed to renewable energy under an existing policy structure. Under a carbon cap, however, the climate value of offshore wind energy comes entirely from reducing the cost of meeting the cap. Our method for estimating the prospective climate value compares bothclimate damagesandabatement costsin cases with and without offshore wind energy. This climate value can be compared to the costs of reducing barriers to new technologies, such as streamlining approval processes. The climate value depends on the cost of offshore wind technology, the climate policy under consideration, the severity of damages from climate change, and the discount rate. In the absence of a binding climate policy, the climate value of offshore wind energy ranges from $246 billion to$2.5 trillion under central assumptions about damages and discount rate, and can reach over \$30 trillion under certain assumptions (low discount rate, high damages, low technology costs). The value of technical change—of moving from the highest cost tomore »