How do we measure the success of Legislative Budget Offices? 24 October 2016, by Usman W. Chohan

Legislative Budget Offices (LBOs) are independent institutions staffed with economists that provide rigorous and non-partisan analysis to legislatures on matters pertaining to the budget. Their appeal lies in their ability to provide robust economic analysis that avoids taking political sides, which is meant to help create a more evidence-based dialogue in politics.

So far, there seems to be a general agreement that, in the countries where they have been instituted, LBOs create some form of good in the budget process. The problem is that measuring this good is complex.

Even as academic investigation into LBOs is growing, the actual measurement of their success has not been a primary focus. Rather, the current body of research has looked at their performance in more intangible ways. These intangible contributions have had a significant impact, but they don’t address the more concrete questions around- how successful are the LBOs?

This question is of great importance since the LBO institutional model has now proliferated across more than 60 countries. As their presence, influence, and scope expands, it becomes critically important for more integrated and more specific approaches to measuring their success – ideally in ways that go beyond the intangible or unmeasurable.

For starters, at least three disciplines take an interest in LBOs: economics, political science, and governance. First, from the perspective of economic theory, LBOs are meant to introduce a more long-term attitude towards the budget process, which is a response to dynamic inconsistency that arises from the desire to consume more in the present and save less for future periods, which leads in turn to a problem known as the permanent deficit. The analysis of LBOs is meant to provide more stability and consistency to the fiscal policy decisions over longer time horizons.

Second, from the standpoint of political theory, LBOs are meant to level the playing field in the budget process between the legislative arm and the executive arm. In many countries, including robust democracies, the dominant executive branch often has the upper-hand in the budget process. Through their analysis, LBOs help to strengthen the legislature’s hand in the budget process, and this is thought to lead to more democratic outcomes both in budget-making and in budget oversight.

Read the full article at Austaxpolicy Blog.