Environmental Policy Performance and its Determinants: Application of a Three‐Level Random Intercept Model
Bocconi IEFE - Centre for Research on Energy and Environmental Economics and Policy Working Paper n. 71
22 Pages Posted: 27 Aug 2014
Date Written: August 27, 2014
We propose the use of a two level random intercept model to measure the degree of environmental policy performance of dierent countries and to study its determinants. Inspired by the literature on multilevel latent models and Item Response Theory (IRT), this framework treats policy commitment as a latent variable which is estimated conditional on the diculty of the policy portfolio implemented by each country. We contribute to the study and scoring of environmental and energy policies in three main ways. First, the model results in a ranking of countries which is conditional on the complexity of their chosen policy portfolio. Second, we provide a unified framework in which to construct a policy indicator and to study its determinants through a latent regression approach. The resulting country ranking can thus be cleaned from the eect of economic and institutional observables which aect policy design and implementation. Third, the model estimates parameters which can be used to describe and compare policy portfolios across countries. We apply this methodology to the case of energy eciency policies in the industrial sectors of 29 EU countries between 2004 and 2011. We conclude by highlighting the future possible applications of this approach, which are not confined to the realm of environmental and energy policy.
Keywords: energy policy, environmental policy, ranking, policy portfolios
JEL Classification: Q58, O57, C33
Suggested Citation: Suggested Citation