A brief description of some quantitative and qualitative methods to assess impacts of adminsitrative simplification efforts, such as the Standard Cost Model and perception surveys

1. EVALUATING IMPACTS OF
REGULATORY REFORMS –
QUANTITATIVE AND QUALITATIVE
METHODS
4 February 2013, Bogotá
Daniel Trnka
Regulatory Policy Division,
Directorate for Public Governance
and Territorial Development
OECD

2. How to evaluate impacts?
• Outputs vs. outcomes
• Improving social welfare through
better/smarter regulation
vs.
• Saving costs for citizens/businesses/public
sector and changing perception
• Ideal case – full RIA
• Other options – calculating reduction of
regulatory/administrative costs (SCM),
perception surveys

3. What is the Standard Cost Model?
• Invented by the Dutch Ministry of Economic Affairs in the mid
90s
• Used by all EU countries + Australia, Mexico, Kazakhstan…
• A tool to measure administrative costs and express them in
monetary terms
• Advantages:
– SCM makes costs ‘visible’
– Easy to measure, monitor & communicate
– Uniformity, transparency, reliability and comparability
– Commitment & awareness of policymakers
– Enables to set a target distribute it across administration
• Disadvantages:
– May be too costly
– Focus only on one part of costs, not benefits

4. Different costs of regulations
The costs of regulation to businesses
Direct financial Compliance Long-term
costs costs structural costs
Indirect financial costs Administrative costs
(substantive compliance
costs)

5. What are administrative costs?
• Administrative costs/burdens (AB) are the costs
imposed on businesses, when complying with
information obligations stemming from
government regulation
• Costs of paperwork – e.g. filling in forms,
submitting them to the administrative
authorities
• But also – gathering, processing and updating
data, inspections

6. The methodology for AC measurement
The Standard Cost Model
Possible to differentiate between particular regulations,
ministries, sectors of regulation

7. Methodological questions
• Full or partial baseline measurement,
prioritisation – Beyond Pareto principle - 10% of the IO’s
accounts for 90% of AC
• Business As Usual (BAU) costs
• Costs of informing third parties (customers,
trade unions…)
• Costs of material, equipment
• Statistical relevance

8. Statistical relevance
• SCM based on assumptions, not on precise
numbers
• 3 to 5 measurements per IO (and
consultations of stakeholders) - a
sophisticated rule of thumb
• If results converge, 3 to 5 is enough, if not,
need a bigger sample

9. Main challenges
• Interagency co-ordination
• Sustained momentum
• Cutting dead wood
• Last mile issue
• Communication – with stakeholders, of results,
managing expectations
• Possible discrepancy between the most burdensome and
the most irritating regulations
• Evaluation
• Potential squeezing-out effect
• Integration with other policies
• Integration into ex ante impact assessment

11. Reducing administrative burdens - does
anyone perceive higher comfort?
• The shortest answer is: “No.”
• A gap between “perceptions and reality”
• But “What is reality?”
• “If a majority of persons perceive the same way
consistently over time – maybe that’s the reality”
• Some possible reasons:
– Absolute numbers vs. individual effects
– Delays in impact
– Cutting dead wood
– Too much focusing on numbers, less on perception,
irritation
– Lack of communication

12. Assessing perception
• Another way to evaluate effects of
simplification efforts
• “happiness” is not our main goal but…
• Getting feedback from users
• Shaping and evaluating regulatory reform
programmes
• Perceptions influence compliance with
regulations and investment decisions
• Getting a well-deserved praise

13. Drivers of perception
• Irritation costs,
• Service quality,
• Different categories of costs,
• Unawareness of goals benefits
• Frequency of reform, uncertainty
• Negativity bias,
• Expectations,
• Trust in government, political opinions
• Communication, involvement

14. Danish burden hunter technique
• Cutting the red tape that business experience as most irritating
• Allowing business to set the agenda and be heard
• User centered methods for collecting data and developing solutions
• Increase knowledge about why specific regulation is experienced as a burden to
business – user behavior and efficient regulation
Objectives
• Identify 10-15 specific initiatives which addresses burdens experienced by
business
• Develop a method that focuses on burdens experienced by business

15. For more information see:
• OECD Cutting Red Tape series:
– National Strategies for Administrative Simplification
– Businesses' Views on Red Tape
– Comparing Administrative Burdens across Countries
– Progress in Public Management in the Middle East and North Africa
– Why Is Administrative Simplification So Complicated?
– Country reviews: the Netherlands, Portugal. Poland, Viet Nam
• Overcoming Barriers to Administrative Simplification
Strategies: Guidance for Policy Makers
• SCM Network:
http://www.administrative-burdens.com/
• OECD project on Assessing performance of regulations
through perception surveys
www.oecd.org/regreform/perceptions

16. THANK YOU!
daniel.trnka@oecd.org
www.oecd.org/regreform