CEA Policy Evaluation and Analysis 5

Question 1

In regulatory impact analysis, which approach estimates the value of a statistical life (VSL) by examining wage premiums workers accept for riskier jobs?

Accepted Answer

Hedonic wage regression

Answer

Hedonic wage studies isolate the compensating wage differential for occupational mortality risk, which is then used to infer the implicit VSL from workers' revealed preferences.

Question 2

The 'Hawthorne effect' is a threat to internal validity in policy evaluations because:

Accepted Answer

Observed subjects alter behavior simply because they are being studied

Answer

The Hawthorne effect means measured outcomes reflect participants' awareness of being observed rather than the program's true causal impact.

Question 3

Which of the following best describes 'budget incidence analysis' in public finance evaluation?

Accepted Answer

Estimating the combined distributional effects of both taxes and government expenditures

Answer

Budget incidence combines tax incidence (who bears the burden of taxes) with expenditure incidence (who receives the benefits of spending) to assess net distributional effects.

Question 4

In program evaluation, 'cream-skimming' refers to service providers who:

Accepted Answer

Selectively enroll the easiest-to-serve participants to boost measured results

Answer

Cream-skimming occurs when providers under performance-based contracts prefer lower-cost participants who would succeed regardless, distorting measured program effectiveness.

Question 5

A policy analyst uses a 'synthetic control' method when:

Accepted Answer

A single treated unit (state or country) has no natural comparison group

Answer

Synthetic control constructs a weighted combination of untreated units that best replicates the pre-treatment trajectory of a single treated unit, serving as a data-driven counterfactual.

(CEA) Certified Economic Analyst Practice Test

(CEA) Certified Economic Analyst Practice Test

CEA Policy Evaluation and Analysis 5