by Andrew White | December 12, 2014 | Comments Off on The maturity of our analytic models drives our maximum effective performance
In Tuesday’s (December 2nd, 2014) US print edition of the Wall Street Journal there was an Opinion piece called, “Congress’s Budget Office Needs Better Numbers“. It seem that the the tools and practices used and followed by the CBO have not been kept up to date. The result is that the main source of information that is used to drive congressional policy on financial issues is outdated, outmoded and more specifically, flawed. The impact of this is that decisions taken by lawmakers may in fact produce unintended and possibly negative outcomes.
The article gives several examples of the sources of these apparent flaws:
- The CBO uses a model to try to understand the deleterious impacts of change in tax policy and how this affects behavior. It seems the models have done a poor job in terms of accurate predictions for tax increase and for regulations that impact growth.
- The models used to relate how private competition replaces public costs is inaccurate. It seems the CBO models consistently underestimate the cost savings from allowing private insurers to replace, for example, single-payer health benefits.
- Overall transparency of the model itself is lacking. It seems that much of the work and the model is operated as a black box and this means few others, even outside the CBO, can offer ideas on how to improve the work and therefore improve the quality of the findings informing political debate and decisions.
If this were a public company, or if this was part of a public company, and if the findings in the article were in fact proven, heads would roll. It is not likely that such poorly performing work would be allowed to continue. If assets don’t add value to its intended outcome, investment in them would changes. I assume the article implies a current political motivation that prevents improvements in what the CBO does. I hope better heads will prevail and changes will be made.
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