What is ‘Value’ in Public Policy?

This was the question posed in a talk recently in Cambridge by Helen Kersley, who is head of the New Economics Foundation’s “Valuing What Matters” Programme.

The issue was about how to broaden policy-makers’ approach to value away from purely short-term economic benefits, to a broader approach which captures longer term social and environmental value as well as economic.

An example of this that sticks in my mind is the impact of the Exxon Valdez oil spill in Alaska in 1989. When assessing the impact of the oil spill, you can show that there was a net huge gain to the economy because of the profits made by the clean up companies!

This is not a new idea – in cost benefit analysis they have been talking about how to capture ‘intangibles’ for at least 30 years. Intangibles are what we now talk about as social and environmental benefits (and costs). NEF has been a leader in developing a measuring tool for impact assessment called Social Return on Investment (SROI) which tries to put a monetary value on non-market impacts.

Helen’s talk was about how policy makers could make better decisions by thinking more explicitly about value:

1. are they pursuing the right goal? – is it growth in itself that we value or is it jobs?

2. are they using the right measures / measuring the right things? In making the decision on the High Speed Rail link from London to Birmingham (HS2) planners put a very high value on time that business travelers spent on the train which skewed calculations towards a shorter journey. But the calculation was done before the web and smart phones enabled businessmen/women to keep working while they were traveling – so can such a high price be still put on time spent on the train? Environmental and social costs were not included at all.

3. Even if it is the right goal, is it the right policy? For the HS2 are there other ways that the goal could have been achieved which could have balanced social / economic and environmental costs and benefits better?

4. Who is it for? Who is the value for and who is bearing the costs? In this example the interests of business executives was given far more weight than that of other stakeholders.

In the discussion afterwards there was some frustration at the way that decisions are still heavily influenced by how the evidence is gathered. It feels like the debate has not moved on that much – we are just getting better at and refining the same old narrowly economic approaches. Isn’t it time for a whole new way of measuring and evaluating value and impact? And why are qualitative measures still not given the weight that they deserve?