1. Systems Design: Hitting the Right Balance Between Autonomy & Control M ICHAEL B EST S TANFORD ieGovern Impact Evaluation Workshop Istanbul, Turkey January 27-30, 2015 : #ieGovern

2. Setting the Scene: Bureaucracy H OW DO BUREAUCRATS IMPLEMENT POLICY ? B UREAUCRATS FOLLOW RULES SET BY GOVERNMENT R ULES SPECIFY HOW BUREAUCRATS SHOULD ACT IN DIFFERENT SITUATIONS THAT MIGHT ARISE W HEN RULES ARE INCOMPLETE, BUREAUCRATS EXERCISE DISCRETION

3. Some Concrete Examples E NVIRONMENTAL REGULATION R ULE : “ REGULATORS MUST INSPECT FACTORIES ON A REGULAR BASIS ” D ISCRETION : W HICH FACTORIES TO VISIT ? I N WHAT ORDER SHOULD VISITS BE SCHEDULED ? H OW MANY INSPECTORS SHOULD VISIT EACH FACTORY ? P ROCUREMENT R ULE : “P ROCURERS MUST ENSURE OPEN & COMPETITIVE BIDDING PROCESS, AND PURCHASE HIGH QUALITY GOODS AT LOW PRICES ” D ISCRETION : H OW TO SPECIFY QUALITY IN TENDER DOCUMENTS ? H OW TO ENSURE MAXIMUM PARTICIPATION IN BIDDING ? T AXATION R ULE : “O FFICIALS MUST ENSURE TIMELY AND ACCURATE TAX PAYMENT ” D ISCRETION : W HO TO AUDIT ? W HAT INFORMATION TO REQUIRE ON TAX RETURNS ? H OW TO FACILITATE / EDUCATE TAXPAYERS ?

4. Incorporating Rules vs Discretion into policy IEs 1: Regulation D UFLO, G REENSTONE, P ANDE & R YAN (2014) S ETTING : G UJARAT, I NDIA. LIMITED CAPACITY -> 44% OF PLANTS ARE INSPECTED BY REGULATORS. R ULE SAYS 100% P OLICY PROBLEM : S HOULD GOVERNMENT INVEST IN CAPACITY TO ENFORCE RULE ? IE: 960 INDUSTRIAL PLANTS. 480 RANDOMLY ASSIGNED TO RECEIVE 100% INSPECTION. 480 REMAIN IN STATUS QUO. R ESEARCH QUESTION : D O ADDITIONAL INSPECTIONS REDUCE POLLUTION ?

5. Incorporating Rules vs Discretion into policy IEs 1: Regulation D UFLO, G REENSTONE, P ANDE & R YAN (2014) R ESULT 1: M ORE INSPECTIONS, MORE CITATIONS : -> P OLICY WORKS. B UT …

6. Incorporating Rules vs Discretion into policy IEs 1: Regulation D UFLO, G REENSTONE, P ANDE & R YAN (2014) R ESULT 2: A DDITIONAL INSPECTIONS HAVE LITTLE IMPACT ON POLLUTION ! W HY ? R EGULATORS EXERCISED DISCRETION TO TARGET SCARCE INSPECTION RESOURCES TO WORST POLLUTERS -> 100% R ULE = OVER - INSPECTION

7. Incorporating Rules vs Discretion into policy IEs 2: Procurement B ANDIERA, B EST, K HAN & P RAT (201 X ) S ETTING : P UNJAB, P AKISTAN. “ AIM OF PROCUREMENT IS THAT IT BRINGS VALUE FOR MONEY TO THE AGENCY AND THE PROCUREMENT PROCESS IS EFFICIENT & ECONOMICAL ” (P UNJAB P ROCUREMENT R EGULATORY A CT 2009) P OLICY PROBLEM 1: H OW TO MEASURE VALUE FOR MONEY ? P OLICY PROBLEM 2: H OW TO IMPROVE VALUE FOR MONEY ?

8. Incorporating Rules vs Discretion into policy IEs 2: Procurement B ANDIERA, B EST, K HAN & P RAT (201 X ) P OLICY S OLUTION 1: F OCUS ON “ GENERIC ” GOODS A DJUST PRICES FOR QUALITY, CONTRACT CHARACTERISTICS, BULK DISCOUNTS ETC. C OMPARE ADJUSTED PRICES ACROSS PUBLIC BODIES -> P RICES PAID BY DIFFERENT PUBLIC BODIES FOR THE SAME GOOD AS INDICATOR OF VALUE FOR MONEY. -> ADJUSTED PRICES VARY WIDELY ACROSS PUBLIC BODIES

9. Incorporating Rules vs Discretion into policy IEs 2: Procurement B ANDIERA, B EST, K HAN & P RAT (201 X ) P OTENTIAL P OLICY S OLUTION 2 ( A ): P AY F OR P ERFORMANCE TREATMENT P UBLIC BODIES RANKED ON VALUE FOR MONEY. T OP 25 PERFORMERS RECEIVE 2 MONTHS SALARY BONUS : “G OLD GROUP ” N EXT 50 PERFORMERS RECEIVE 1 MONTH SALARY BONUS : “S ILVER G ROUP ” N EXT 75 PERFORMERS RECEIVE ½ MONTH SALARY BONUS : “B RONZE GROUP ”

10. Incorporating Rules vs Discretion into policy IEs 2: Procurement B ANDIERA, B EST, K HAN & P RAT (201 X ) P OTENTIAL P OLICY S OLUTION 2 ( B ): D ISCRETION TREATMENT B UDGET RELEASED IN 2 TRANCHES & ON TIME. ( PLANNING FLEXIBILITY ) C ASH ON HAND INCREASED ( MAKE IMMEDIATE CASH PAYMENTS TO VENDORS ) P RE - AUDIT APPROVALS STREAMLINED ( REDUCE DELAY BETWEEN INVOICE AND PAYMENT )

11. Incorporating Rules vs Discretion into policy IEs 2: Procurement B ANDIERA, B EST, K HAN & P RAT (201 X ) I MPACT E VALUATION : 618 P UBLIC BODIES IN AGRICULTURE, HIGHER EDUCATION, WORKS & HEALTH DEPARTMENTS RANDOMLY ASSIGNED TO 1 OF 4 GROUPS 1. P AY FOR P ERFORMANCE (150 PB S ) 2. D ISCRETION (157 PB S ) 3. P AY FOR P ERFORMANCE & D ISCRETION (159 PB S ) 4. S TATUS QUO [ CONTROL ] (152 PB S ) P RELIMINARY RESULTS IN A UGUST 2015…