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A Taxonomy of regulatory indicators Claudio Radaelli Professor of Political Science

A Taxonomy of regulatory indicators Claudio Radaelli Professor of Political Science University of Exeter Centre for European Governance JRC seminar Econometrics and Applied Statistics Unit, Ispra (Italy), 11 November 2009. Outline. Background and review of experiences

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A Taxonomy of regulatory indicators Claudio Radaelli Professor of Political Science

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  1. A Taxonomy of regulatory indicators Claudio Radaelli Professor of Political Science University of Exeter Centre for European Governance JRC seminar Econometrics and Applied Statistics Unit, Ispra (Italy), 11 November 2009

  2. Outline • Background and review of experiences • Problems with regulatory measures • Rationales for indicators • Measures and management processes • A monitoring and evaluation dashboard

  3. Take-home messages • Conventional approach: first we define quality, then we deduct indicators from our principles of quality. Instead I argue that we should use indicators to push policymakers to define quality • Researchers are concerned with the design of composite measures, but they may ignore the issue of how and who will use them. We should design indicators and processes of utilization jointly instead, and adjust technical properties in order to maximise utilization • The monitoring and evaluation dashboard

  4. Background • OECD Product market regulation • OECD Capacity to produce high quality regulation, recently discussion on index of RIA effectivness • Doing Business Indicators • WB Governance indicators (Section on Regulation) • ENBR, funded by the European Commission • IQ Tools, funded by the European Commission • Indicators of Regulatory Quality (DG Enterprise) • Governments: Australia, UK, USA,… • My research is currently funded by the European Research Council, Advanced Grant on Analysis of Learning in Regulatory Governance (ALREG) • Most of my work on indicators is co-authored with Fabrizio De Francesco

  5. Conceptual background • The better regulation agenda: a mix of policy tools • Focus on regulatory quality rather than extent of regulation • This is an assumption with far-reaching implications • It raises questions: what is quality and what does quality help us to achieve? • There is also debate on who should use indicators: governments, experts, stakeholders, mass media?

  6. The puzzle of the designer • Trade off between generalized and context-sensitive measures • Diversity and convergence • Adoption and implementation of regulatory quality programmes • Subjective and objective measures

  7. Looking for “quality” by using metrics • Indicators dissolve ambiguity around the notion of quality • They reveal preferences • They contribute to the emergence of commitment, especially if they are embedded in processes In short, using metrics to measure AND to manage better regulation policy

  8. Objective 1. To ensure that all new or revised regulation confers a net benefit to the community 2. To achieve essential regulatory objectives without unduly restricting business in the way in which these objectives are achieved. Indicators 1. % of regs for which the RIA adequately address the net benefit to the community 2.A % if Regs for which the RIA adequately justified the compliance burden on business. 2.B % of regs which provide businesses and stakeholders with some appropriate flexibility (as defined) to determine the most cost effective means of achieving regulatory objectives. Example: Australian indicators (2003)

  9. Functions of metrics • Justification of cost of better regulation policy • Legitimising the increase in political control of regulators • Proving or challenging statements about the results of BR (Better Regulation) • Making BR more accountable and transparent, encouraging pluralistic monitoring and evaluation

  10. Measures and regulatory management processes • The interplay between technical and political roles • Experts provide the menu of simple measures, policy officers choose from the menu what they want to eat -> selection and weights • Mechanism of revealed preferences • Using adoption of indicators to build credible commitments and design management architectures

  11. Who should use indicators? • The organization’s perspective • A constellation of policy actors • A pool of countries that share a vision, eg the 27 governments of the EU

  12. Knowledge utilization in the EU • Different systems are possible, but all member states should stick to a menu of 15-20 simple measures from menus identified by researchers (Radaelli and De Francesco have 22 basic indicators) • Process of facilitated coordination to assist in the definition of regulatory quality and progress towards more complex measures • Monitoring and learning: a balance

  13. Building a system of indicators Focus on regulatory reform tools, such as • Simplification • Impact Assessment • Consultation • Programs for access to legislation/regulation (Access and Transparency tools) • Administrative burdens reduction plans / Standard cost model

  14. How to present indicators to a policymaker: an example

  15. Causality • Regulatory reform institutions, such as Better Regulation Executive or OIRA (1) • Regulatory reform tools (2) • Activities like performing the RIAs or SCM (3) • Economic effects of the rules produced via RIAs or simplified via SCM (4) • Perhaps governance outcomes such as more transparency and fair access to policy formulation (5) A long causal chain indeed! (1) -> (2) -> (3) -> (4) and (5)?

  16. Types of measures • Quality of design (for each tool, such as RIA, Simplification, Standard Cost Model etc) • Activity measures: how many RIAs, consultations, etc • Survey measures (firms and regulators) • Real-world economic impact

  17. Purpose and dimensions By combining purpose and dimension we create a dashboard Each cell represents a type of indicator The selection of specific indicators is a policy choice to be made by policymakers Possible aggregations by row and column

  18. Grouping indicators by purpose • Internal accountability and institutionalization of BR policies • External accountability and communication • Sophistication of economic analysis

  19. Grouping indicators by purpose • Internal accountability and institutionalization of better regulation policies • External accountability and communication • Economic sophistication

  20. The main dimensions of BR • Context • Design • Guidance and support • Output • Economic Impact

  21. Political administrative context Regulatory reform policy/ Organizational design Guidance and support Output Impact Internal accountability External accountability Economic sophistication A monitoring & evaluation dashboard

  22. Political administrative context Requirement to justify regulation Ex post review of regulation General guidance on policy analysis Regulatory reform policy/ Organizational design Board-level champions Regulatory principles set in consultation with Parliament Max. of welfare is the main choice criteria Guidance and support Explicit criteria for selection of RIA Full publication of report and analysis Max. of welfare is the main choice criteria Output Cost of RIA programme is known Annual report on cost and lives saved Number of RIAs that comply with guidance Impact RIA methods applied across the entire policy cycle Survey-based indicators (regulators, firms and citizens)‏ DB and quality of governance indicators Internal accountability External accountability Economic sophistication A monitoring & evaluation dashboard

  23. Thank you • Papers and documentation available on request (work in progress with Fabrizio De Francesco) • Comments are very welcome: C.Radaelli@ex.ac.uk

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