Policy Experimentation in China: the Political Economy of Policy Learning

100 Pages Posted: 2 Nov 2021

See all articles by Shaoda Wang

Shaoda Wang

University of Chicago

David Y. Yang

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: October 27, 2021

Abstract

Many governments have engaged in policy experimentation in various forms to resolve uncertainty and facilitate learning. However, little is understood about the characteristics of policy experimentation, and how the structure of experimentation may affect policy learning and policy outcomes. We aim to describe and understand China’s policy experimentation since 1980, among the largest and most systematic in recent history. We collect comprehensive data on policy experimentation conducted in China over the past four decades. We find three main results. First, more than 80% of the experiments exhibit positive sample selection in terms of a locality’s economic development, and much of this can be attributed to misaligned incentives across political hierarchies. Second, local politicians allocate more resources to ensure the experiments’ success, and such effort is not replicable when policies roll out to the entire country. Third, the presence of sample selection and strategic effort is not fully accounted for by the central government, thus affecting policy learning and distorting national policies originating from the experimentation. Taken together, these results suggest that while China’s bureaucratic and institutional conditions make policy experimentation at such scale possible, the complex political environments can also limit the scope and bias the direction of policy learning.

JEL Classification: D72,D8,O2,P16,P21

Suggested Citation

Wang, Shaoda and Yang, David Y., Policy Experimentation in China: the Political Economy of Policy Learning (October 27, 2021). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-129, Available at SSRN: https://ssrn.com/abstract=3951358 or http://dx.doi.org/10.2139/ssrn.3951358

Shaoda Wang (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

David Y. Yang

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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