Policy analysis is hard Why is it so hard to tell what's going on with government actions? Consider lowering income tax rates. Will lowering taxes increase work efort and labor supply? Unlike the physical and natural sciences, difficult to perform carefully controlled experiments on the economy Oftentimes, there is no control groupon comparison group" for a policy2 Policy analysis is hard • Why is it so hard to tell what’s going on with government actions? – Consider lowering income tax rates. Will lowering taxes increase work effort and labor supply? • Unlike the physical and natural sciences, difficult to perform carefully controlled experiments on the economy. • Oftentimes, there is no “control group” or “comparison group” for a policy