TY  - JOUR
AU  - Lise,Jeremy
AU  - Seitz,Shannon
AU  - Smith,Jeffrey
TI  - Equilibrium Policy Experiments and the Evaluation of Social Programs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10283
PY  - 2004
Y2  - February 2004
UR  - http://www.nber.org/papers/w10283
L1  - http://www.nber.org/papers/w10283.pdf
N1  - Author contact info:
Jeremy Lise
Jeremy Lise
Department of Economics
University College London, Gower Street
London, United Kingdom
WC1E 6BT
Tel: +44 (0)20 7679 5887
E-Mail: j.lise@ucl.ac.uk

Shannon Seitz
Boston College
E-Mail: sseitz@analysisgroup.com

Jeffrey Smith
Department of Economics
University of Michigan
238 Lorch Hall
611 Tappan Street
Ann Arbor, MI 48109-1220
Tel: 734/764-5359
E-Mail: econjeff@umich.edu
AB  - This paper makes three primary contributions. First, we demonstrate the usefulness of general equilibrium models as tools with which to draw policy implications for policies implemented in practice only as small-scale social experiments. Second, we illustrate the usefulness of social experiments as a tool to evaluate equilibrium models. In particular, we calibrate our model using only data on an experimental control group and from general data sets, and then use it to predict (in partial equilibrium) the outcomes experienced by an experimental treatment group. We find that it predicts these outcomes remarkably well. Third, we apply our methodology to the evaluation of the Canadian Self-Sufficiency Project (SSP), a policy providing generous financial incentives for Income Assistance (IA) recipients to obtain stable employment. This policy is similar to many other policies designed to 'make work pay' currently under debate or in place in the US, the UK and elsewhere. Our results reveal several important feedback effects associated with the SSP policy; taken together, these feedback effects reverse the cost-benefit conclusions implied by the partial equilibrium experimental evaluation.
ER  -