Understanding and Increasing Policymakers’ Sensitivity to Program Impact∗

Abstract

Policymakers routinely make high-stakes funding decisions. Assessing the value of a program is difficult and may be affected by bounded rationality. In two experiments with U.S. policymakers and the general public, we find that respondents’ valuations of programs are inelastic with respect to the program’s impact. We design and test two portable decision aids---one that compares programs side-by-side and another that aggregates multiple features of impact into a single metric. The two decision aids increase elasticity by 0.20 on a base of 0.33 among policymakers and by 0.21 on a base of 0.21 among the general public. We provide evidence that the cognitive difficulty of translating impact-relevant information into policy decisions helps explain our findings.

Keywords: Policymakers, Bounded rationality, experiments, Program impact