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nformation is the life-blood of public policy. Identifying a problem is the first step to solving it, and once a solution is in place, we need metrics to understand if the policy is working and how to turn its weaknesses into strengths. Though the data we have today are, unsurprisingly, better than ever, there are still too many dark spots and missing data on a host of important issues. Take, for example, the financial sector. Bank regulators, lacking a clear picture of how predatory mortgage loans are connected to global capital flows, allowed an exuberant bubble to spin into a crash in 2008. It's a reminder that if we can identify gaps in our knowledge, we would be remiss not to close them.
President Barack Obama recognizes the need for better data; he's expressed commitment to scientifically supported policies and filled his administration with wonkishly inclined Democrats. The Dodd-Frank financial-reform bill his administration supported mandates some 67 studies to guide policy-makers' supervision of the financial markets. Obama's signature accomplishment, health-care reform, emphasizes a new commission to gather information about which medical practices are most effective. Conservatives balked, claiming that this data-driven approach was a way to justify taking Grandma off the ventilator. Liberals -- and most policy experts -- countered that it was a way to make the system more efficient.
This debate isn't just about how to collect new data but also how to interpret the data we already have. A perennial question is how to define poverty; the current measure is pegged to the economy of the 1960s and doesn't reflect today's family finances. A new measure developed by the Commerce Department will paint a more accurate picture of poverty, but it is opposed by conservatives who fear that the results will portray more penury in the United States -- "propaganda," scoffs the Heritage Foundation. Sometimes, people just don't want to know.
Ignorance, however, is only bliss if you think the government shouldn't play an active role in society; bureaucratic inertia favors conservatives. Though new technology has made sharing and manipulating data easier, the government is playing catch-up in putting information online so the public and academics can put it to good use. In many policy areas, the government isn't just failing at transparency but also usability -- data sets don't always lend themselves to apples-to-apples comparisons, making much-needed analysis more difficult to obtain.
We spoke with experts in and out of government to highlight six areas where missing information is preventing us from enacting sound public policy.
Senate Democrats recently made political hay with the Creating American Jobs and Ending Offshoring Act, a dead-on-arrival proposal that would have penalized companies that send jobs overseas. It's a hot topic, but systematic measures of offshoring are hard to come by. The Bureau of Economic Analysis tracks imports and exports but not the labor impact of trade. The Bureau of Labor Statistics tracks "movement of work," which counts layoffs involving more than 50 workers but not smaller losses. Plus, jobs not created in the U.S. aren't counted. If an automaker opens a plant in China, rather than in Lansing, or a startup hires a back-office firm in India rather than an in-house accountant, is that offshoring? According to the BLS measure, no. The auto- and office workers might have a different answer. The bureau notes that offshoring of service work, like that bill-processing gig, may be particularly undercounted, due to "a dearth of relevant data." BLS estimates that, as of 2008, some 30 million service jobs were vulnerable to offshoring. If those jobs were lost, we might not know.
America is spending a lot of money to create jobs, with some $787 billion allocated by the American Recovery and Reinvestment Act, a k a the stimulus. We know how many jobs are created or retained with those government dollars -- that's a reporting requirement under the law. What We Don't Know is who's getting them, how long they last, or how much they pay. We also don't know if one job is a single full-time job or if four people are working 10 hours a week. OMB Watch, a member of the Coalition for an Accountable Recovery, has called for the tracking of the type of work created as well as the wages, health-care coverage, and demographics of stimulus -- funded workers. So far, though, those details haven't been recorded.
Recipients of stimulus funds do have to report 99 data points, including information on subcontractors, some executive -- compensation data, and other tidbits that please transparency advocates. "This is by far the most transparent federal spending bill in history," says Greg Leroy, executive director of Good Jobs First. "Don't sell it short."
The dismal performance of our country's banks and the resulting bailouts have raised questions about how financiers treat their customers. In the Dodd-Frank bill, a new agency was created to protect consumers from predatory financial products. The problem? We don't have good data on how credit-card companies make their money, especially when it comes to penalty fees. That might not seem like a big deal, but the example of checking-account overdraft fees is useful. After a landmark Federal Deposit Insurance Corporation study revealed that banks make three-quarters of their fee revenue from automatic overdraft penalties, the Federal Reserve created new rules limiting the charges and forcing banks to disclose their policies. Obtaining similar information from credit-card companies would allow for better regulation, and publishing the data would enable customers to understand how much money the companies make off them.
While we fight poverty through education and welfare programs, the only sure-fire way to build a strong middle class is to make certain Americans have the tools they need to build wealth. Encouraging people to save money and use safe credit products requires understanding how they manage their finances. Unfortunately, it's hard to say exactly what low-income Americans do with their money, because we aren't asking enough people the right questions (only in 2007 did we start asking people if they use payday loans) often enough (a three-year gap in a key study means we'll have no data for most of the recession). Most consumer surveys are focused on higher-income Americans, which leaves us unaware of how to help low-income folks climb the ladder. Improved consumer surveys would add more low-income families to the mix, be more frequent, and add questions about fringe financial services. A better picture of family balance sheets would improve government efforts to encourage responsible asset building.
America is almost three years into a massive housing crisis, and astonishingly, the federal government is not tracking foreclosures. The numbers you hear -- that one in 75 houses in Las Vegas is in foreclosure, say -- likely come from RealtyTrac, "the leading online marketplace of foreclosure properties." It's also the country's main source of foreclosure data. Governmental foreclosure -- prevention efforts rely on numbers collected by a company whose mission is to help people "locate, evaluate, buy and sell properties." Unsurprisingly, that's not working very well. The much-touted Home Affordable Mortgage Program was projected to save 3 million to 4 million homes, but as of September, it had permanently modified mortgages for just over 468,000 homeowners. The financial-reform bill included a provision creating a foreclosure database, featuring comprehensive stats on distressed mortgages. The bill, however, didn't specify exactly what the database would track or how it would be paid for.
Anecdotal evidence suggests evictions, too, are on the rise. The National Low Income Housing Coalition estimated in 2009 that 40 percent of foreclosed properties had renters, who were often tossed out by banks when they took ownership. President Obama signed a bill giving such renters certain rights, but without any baseline numbers on pre-crisis evictions and no plan for ongoing measurement, assessing the law's impact is nearly impossible.
The Home Mortgage Disclosure Act is a vintage piece of data-generating legislation. The 1975 law requires lenders to report where home loans are made, the race of the borrower, and whether the loan is prime or subprime. Consumer advocates and reporters have used HMDA data to track patterns in mortgage lending, to see whether, for instance, high-cost subprime loans are concentrated in communities of color. When advocates use HMDA to assert racial discrimination in lending, the industry response is often that the disparities in pricing are based on credit scores, not race. Now, under the financial-reform bill, lenders must report a slew of new details, including the credit score and age of the borrower and whether the loan had teaser rates or prepayment penalties, two features common in questionable subprimes. This data may put to rest the heated debate around redlining in the mortgage market.
The U.S. Food and Drug Administration is charged with protecting public safety by reviewing drugs and devices before they go to the market, but much of the information it collects is not available to the public. Reports of "adverse events" -- when a drug or medical device already on the market is causing harm -- are incomplete; in many cases, it's necessary to file a Freedom of Information Act request to get the details. Currently, the FDA also does not let us know when a company starts to investigate a new drug or when it decides to put a trial on hold or terminate it. If a company decides to put an end to its investigations because of safety concerns, the FDA doesn't tell us. So if you are, say, a researcher studying a particular drug molecule that's similar to one a company decided to ditch because of a safety issue, you have no way of knowing.
When the infant-formula manufacturer Abbott agreed recently to recall certain batches of Similac that may have been contaminated with beetle parts, the FDA made that information available in a new section of its website in a programmer friendly, mashup-ready format known as "XML." The agency, though, had no authority to compel the company to provide basic information on the recall, such as how many cans were affected and where they had been distributed, because all reporting is voluntary. Getting complete information about recalls -- whether for food, drugs, or medical devices -- would be invaluable for public-health experts dealing with an outbreak, journalists reporting on it, and consumers who want to avoid the stuff. Last spring, the agency called for comment on 21 draft proposals to increase agency transparency. We're still waiting to see what the FDA will do.
Experts on early childhood education agree that attending preschool has a positive effect on a child's long-term educational attainment but have no way of tracking which programs produce the best results. A wide variety of preschool programs exist, administered privately or by state or federal agencies. These programs have no uniform way of collecting data, if they collect such information at all, and no system for sharing what they do record with grade schools to track students' progress over time. That means that once students enter grade school, their results can't be linked to their preschool record. Preschools can't monitor how well they are preparing their alumni, and policy-makers can't develop an integrated curriculum that accounts for the fact that students move through different education systems. An identification number that tracks students from preschool to the workforce would provide a fuller picture of student experience, but privacy concerns and bureaucratic challenges make such an innovation unlikely.
Colleges are routinely ranked based on input values like the average SAT score of the entering class, but there is no way to quantify their output -- how much they teach students over the course of four years. Intellectual improvement is a subjective value and therefore difficult to quantify. It also varies widely by program. Some degrees may focus on communication skills, while others produce bigger gains in critical thinking. Without any measure of how much students improve, the marketplace for degrees skews away from teaching quality toward reputation. Students can graduate from renowned schools without the skills they need in the workforce, while quality low-profile schools go unrecognized. Tests like the Collegiate and Learning Assessment, which students take during their first year and again when they graduate, offer a potential solution but are unpopular with colleges wary of having weaknesses exposed.
Thanks to the Supreme Court's 2010 ruling in Citizens United and other recent legal decisions, there is an explosion of new election spending by outside groups -- $122 million as of early October -- much of it by groups with innocuous names like Americans for Job Security, Common Sense in America, and American Crossroads, which counts Karl Rove among its fundraisers and advisers. Reports on who is financing these groups tend to dribble in slowly, and in some cases, when it's a nonprofit group or trade association doing the spending, we may never find out who is spending big money to influence the election.
The DISCLOSE Act, which would have given us more information on outside ads, was filibustered by Senate Republicans in September. If the new Congress doesn't take action on this front, come 2012, we'll know even less.
Most of us can go online to find an up-to-the-minute record of our credit-card transactions, but if we want to know how much cash a Senate candidate collected today, we need to wait weeks or even months. Even though political action committees, House candidates, and party committees must alert the Federal Election Commission electronically within 48 hours of receiving a major donation, Senate candidates still file the old-fashioned way -- that is, on actual paper, which then needs to be converted to digital files. That means there is a considerable lag time between filing deadlines and when the information is easily accessible. You can't search and sort last-minute reports of large contributions received on the FEC's website often until three or four days after the reports are submitted. That means that voters may wait until after they fill in their ballots to see who dropped last-minute money into races. There is no technical reason for any of this. We should be able to see political contributions online, in real time.