Impact Evaluation for Evidence-Based Policy Making Arianna Legovini Lead, Africa Impact Evaluation Initiative

Answer Three Questions Why is evaluation valuable? What makes a good impact evaluation? How to implement evaluation?

IE Answers: How do we turn this teacher…

…into this teacher?

Why Evaluate? Need evidence on what works Allocate limited budget Fiscal accountability Improve program/policy overtime Operational research Managing by results Information key to sustainability Negotiating budgets Informing constituents and managing press Informing donors

Traditional M&E and Impact Evaluation monitoring to track implementation efficiency (input-output) impact evaluation to measure effectiveness (output-outcome) BEHAVIOR MONITOR EFFICIENCY INPUTS OUTPUTS OUTCOMES EVALUATE EFFECTIVENESS $$$

Question types and methods Process Evaluation / Monitoring: Is program being implemented efficiently? Is program targeting the right population? Are outcomes moving in the right direction? Descriptive analysis Impact Evaluation: What was the effect of the program on outcomes? How would outcomes change under alternative program designs? Does the program impact people differently (e.g. females, poor, minorities)? Is the program cost-effective? Causal analysis

Which can be answered by traditional M&E and which by IE? Are books being delivered as planned? Does de-worming increase school attendance? What is the correlation between enrollment and school quality? Does the decentralized school management lead to an increase in learning achievement?

Types of Impact Evaluation Efficacy: Proof of Concept Pilot under ideal conditions Effectiveness: At scale Normal circumstances & capabilities Lower or higher impact? Higher or lower costs?

So, use impact evaluation to…. Test innovations Scale up what works (e.g. de-worming) Cut/change what does not (e.g. HIV counseling) Measure effectiveness of programs (e.g. JTPA ) Find best tactics to e.g. change people’s behavior (e.g. come to the clinic) Manage expectations e.g. PROGRESA/OPORTUNIDADES (Mexico) Transition across presidential terms Expansion to 5 million households Change in benefits Battle with the press

Next question please What makes a good impact evaluation? Why is evaluation valuable? What makes a good impact evaluation? How to implement evaluation?

Assessing impact examples How much do girl scholarships increase school enrollment? What is the level of beneficiary’s learning achievement with program compared to without program? Compare same individual with & without programs at the same point in time Never observe same individual with and without program at same point in time

Solving the evaluation problem Counterfactual: what would have happened without the program Need to estimate counterfactual i.e. find a control or comparison group Counterfactual Criteria Treated & counterfactual groups have identical initial characteristics on average, Only reason for the difference in outcomes is due to the intervention

2 “Counterfeit” Counterfactuals Before and after: Same individual before the treatment Non-Participants: Those who choose not to enroll in program Those who were not offered the program

Before and After Example Food Aid Compare mortality before and after Find increase in mortality Did the program fail? “Before” normal year, but “after” famine year Cannot separate (identify) effect of food aid from effect of drought

Before and After Compare Y before and after intervention B Before-after counterfactual A-B Estimated impact Control for time varying factors C True A-C True impact A-B is under-estimated Y Before After C A B B t-1 t Time Treatment

Non-Participants…. Compare non-participants to participants Counterfactual: non-participant outcomes Problem: why did they not participate?

Exercise: Why participants and non-participants differ? Access to school Poorer Unmet demand More organized community Achievement Poverty Gender Children who come to school and children who do not? Communities that applied for funds for a new classroom and communities that did not? Children who received scholarships and children who did not?

Literacy program example Treatment offered Who signs up? Those who are illiterate Have lower education than those who do not sign up Educated people are a poor estimate of counterfactual

What's wrong? Selection bias: People choose to participate for specific reasons Many times reasons are directly related to the outcome of interest Cannot separately identify impact of the program from these other factors/reasons

Program placement example Government offers school inputs program to schools with low infrastructure Compare achievement in schools offered program to achievement in schools not offered Program targeted based on lack of inputs, so Treatments have low achievement Counterfactuals have high achievement Cannot separately identify program impact from school targeting criteria

Need to know… Why some get program and others do not How some get into treatment and other in control group If reasons correlated with outcome cannot identify/separate program impact from other explanations of differences in outcomes The process by which data is generated

Possible Solutions… Guarantee comparability of treatment and control groups ONLY remaining difference is intervention In this workshop we will consider Experimental design/randomization Quasi-experiments Regression Discontinuity Double differences Instrumental Variables

These solutions all involve… Randomization Give all equal chance of being in control or treatment groups Guarantees that all factors/characteristics will be on average equal between groups Only difference is the intervention If not, need transparent & observable criteria for who is offered program

How to implement evaluation? The Last Question Why is evaluation valuable? What makes a good impact evaluation? How to implement evaluation?

Implementation Issues Political economy Policy context Finding a good control Retrospective versus prospective designs Making the design compatible with operations Ethical Issues Relationship to “results” monitoring

Political Economy What is the policy purpose? In USA test innovations to national policy, defend budget In RSA answer electorate In Mexico allocate budget to poverty programs In IDA country pressure to demonstrate aid effectiveness and scale up In poor country hard constraints and ambitious targets: how to reach those targets?

Evidence culture and incentives for change Cultural shift From retrospective evaluation Look back and judge To prospective evaluation Decide what need to learn Experiment with alternatives Measure and inform Adopt better alternatives overtime Change in incentives Rewards for changing programs that do not work Rewards for generating knowledge Separating job performance from knowledge generation

The Policy Context Address policy-relevant questions: What policy questions need answers? What outcomes answer those questions? What indicators measures outcomes? How much of a change in the outcomes would determine success? Example: teacher performance-based pay Scale up pilot? Criteria: Need at least a 10% increase in test scores with no change in unit costs

Opportunities for good designs Use opportunities to generate good control groups Most programs cannot deliver benefits to all those eligible Budgetary limitations: Eligible who get it are potential treatments Eligible who do not are potential controls Logistical limitations: Those who go first are potential treatments Those who go later are potential controls

Who gets the program? Who goes first? Eligibility criteria Roll out Are benefits targeted? How are they targeted? Can we rank eligible's priority? Are measures good enough for fine rankings? Who goes first? Roll out Equal chance to go first, second, third?

Ethical Considerations Do not delay benefits: Rollout based on budget/administrative constraints Equity: equally deserving beneficiaries deserve an equal chance of going first Transparent & accountable method Give everyone eligible an equal chance If rank based on some criteria, then criteria should be quantitative and public

Retrospective Designs Hard to find good control groups Must live with arbitrary or unobservable allocation rules Administrative data good enough to reflect program was implemented as described Need pre-intervention baseline survey On both controls and treatments With covariates to control for initial differences Without baseline difficult to use quasi-experimental methods

Manage for results Retrospective evaluation cannot be used to manage for results Use resources wisely: do prospective evaluation design Better methods More tailored policy questions Precise estimates Timely feedback and program changes Improve results on the ground

Monitoring Systems Projects/programs regularly collect data for management purposes Typical content Lists of beneficiaries Distribution of benefits Expenditures Outputs Ongoing process evaluation Information is needed for impact evaluation

Evaluation uses administrative information to: Verify who is beneficiary When started What benefits were actually delivered Necessary condition for program to have an impact: benefits need to get to targeted beneficiaries

Improve use of administrative data for IE Program monitoring data usually only collected in areas where active Collect baseline for control areas as well Very cost-effective as little need for additional special surveys Add a couple of outcome indicators Most IE’s use only monitoring data

Overall Messages Impact evaluation useful for Validating program design Adjusting program structure Communicating to finance ministry & civil society A good evaluation design requires estimating the counterfactual What would have happened to beneficiaries if had not received the program Need to know all reasons why beneficiaries got program & others did not

Design Messages Address policy questions Stakeholder buy-in Interesting is what government needs and will use Stakeholder buy-in Easiest to use prospective designs Good monitoring systems & administrative data can improve IE and lower costs