Understanding policy impact
Heriot-Watt University professor Mark Schaffer has created computer programs that enable economists and researchers to analyse the effect of policies where data is complex. Prof Schaffer’s work has helped governments and agencies such as the World Bank better understand impact in a broad range of policy areas.
Most new policy is introduced in settings where it is unfeasible to set up controlled experiments to investigate impact. So, when change occurs, causal links are difficult to establish. Sophisticated new econometric techniques potentially offer better methods for this difficult task. But an important obstacle has been the availability of new estimation and testing methods in commercially-available software packages. Such innovations are typically not introduced by commercial providers until the technique is generally accepted. In the fast-moving field of econometrics, this means that dissemination of cutting-edge methods is distinctly patchy.
A particularly important method for use in complex policy analysis is instrumental variables estimators (IV) and its generalisation, the Generalised Method of Moments (GMM). For over a decade, Prof Schaffer has worked with an international group of academics set on making successive advances in IV/GMM techniques available to applied researchers. Together they have developed and implemented a comprehensive set of IV/GMM estimation and testing procedures for the Stata software environment.
Stata is a commercial statistical package used worldwide with a large user community. Importantly, StataCorp supports integration of user-written software. This means that the programs and supporting documentation developed by Schaffer and colleagues can be easily found and installed by users.
The results speak for themselves: some 400,000+ downloads over the last five years. The programs co-written by Prof Schaffer are now well established across the world in governmental and leading research agencies as well as in academia.