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Performance in Government and Nonprofits

Communicating Uncertainty in Policy Analysis 

In a public discourse filled with accusations of “fake news,” public policy experts across disciplines are striving to ground their analyses and predictions in facts. But in a recent article in the Proceedings of the National Academy of Sciences, IPR economist Charles Manski argues they undermine their own credibility by expressing “incredible certitude”—exact predictions that are based on assumptions and incomplete data. He details how this false certainty creeps into policy analysis through six types of practices: conventional certitude, dueling certitudes, conflating science and advocacy, wishful extrapolation, illogical certitude, and media overreach, describing examples of each. Manski warns that incredible certitude discourages new research and prevents analysts and their audiences from learning to cope with uncertainty. He writes that policy analysts could bolster their credibility by more forthrightly stating their uncertainty, suggesting that a greater awareness of the harmful nature of incredible certitude could help transform the social norms that encourage it. Manski is the Board of Trustees Professor in Economics.

Meeting the Challenge of Effectiveness in Nonprofit Partnerships 

When social service-oriented nonprofits choose the partner organizations with which they carry out their work, there are a number of competing factors in the selection process. In a study published in Voluntas, communication studies scholar and IPR associate Michelle Shumate and her co-author examine those factors with an eye toward the impact of that process on the ultimate effectiveness of the partnership itself.  They note that effectiveness is not defined solely by goal achievement, but by the smooth functioning and reciprocity of the working relationship. By surveying more than 200 human services nonprofits in a single state, the authors determine that two key factors make that happen: trust and the quality of the two groups’ communication, as measured by a five-item inventory. Respondents said that two of the most important factors in the selection process were prior experience with the partner and that partner’s positive reputation. Shumate and her co-author say those factors increase the amount of knowledge each party has about the other, therefore inducing the trust and smooth communication that leads to effectiveness. They find that the most effective outcomes come when nonprofits choose their partners based on such factors that mitigate risk above all else.

The Perils of Pay-for-Performance 

Government and nonprofit activities are often difficult, if not impossible, to measure and assign monetary value to in ways that are broadly acceptable. These difficulties prevent the adoption of incentive systems that align rewards with performance. IPR economist Burton Weisbrod is writing a book, under contract with Stanford University Press, to consider the unintended—but foreseeable and counterproductive—consequences of the rising tide of efforts to reward performance measures, such as standardized tests for schoolchildren and crime rates for police. These involve adopting measures that are both incomplete and biased and then rewarding them. Titled “The Perils of Pay-for-Performance: Why Strong Rewards in Government and Nonprofit Organizations Don’t Work,” the book will cover a wide array of public and nonprofit sector services, such as K–12 education, hospitals, nursing homes, hospices, policing and jails, museums, charities, and the federal judiciary. Weisbrod emphasizes how the forces at work in these services cause strong rewards to be strategically gamed, inflating or distorting results, so that measured performance, not truly good performance, is rewarded. He explains why measured performance and actual performance are in conflict—why, for example, larger rewards in public schools might improve test scores but not learning. He notes that the next frontier for pay-for-performance is higher education and predicts the forms gaming will take there. Weisbrod directs IPR’s Performance Measurement and Rewards Series, which features presentations by researchers studying healthcare, education, policing, and other social service industries. He is Cardiss Collins Professor of Economics.

Sports-Based Development Programs and Wellbeing

In global development, youth sports programs are seen as a way to improve the well-being, socioemotional state, and “soft skills” of at-risk youth, and hundreds of millions of dollars are spent on them each year. But do they work? In a recent working paper, IPR economist Lori Beaman and her colleagues run a randomized experiment in Liberia, a country where three-fifths of its population is under the age of 25 and youth unemployment is high. They compare 1,200 15-to-25-year-olds randomly selected to participate in a program, Sport for Change, to a control group who did not. While Beaman and her co-authors find little evidence of an impact on psychosocial traits such as resiliency that are thought to improve job prospects, those participating were 12% more likely to work and earn 12% more than those in the control group. Although the researchers were unable to isolate the factors driving that participation, they do observe that those most likely to struggle to find a job—young people, women and the uneducated and untrained—benefited the most from participating in a sports program.