@article {638301, title = {A Unified Welfare Analysis of Government Policies}, journal = {Quarterly Journal of Economics}, volume = {135}, number = {3}, year = {2020}, note = { View the estimates online at www.policyinsights.orgWatch the Econimate Video }, pages = {1209-1318}, abstract = {We conduct a comparative welfare analysis of 133 historical policy changes over the past\ half-century in the United States, focusing on policies in social insurance, education and job\ training, taxes and cash transfers, and in-kind transfers. For each policy, we use existing causal\ estimates to calculate both the benefit that each policy provides its recipients (measured as their\ willingness to pay) and the policy{\textquoteright}s net cost, inclusive of long-term impacts on the government{\textquoteright}s\ budget. We divide the willingness to pay by the net cost to the government to form each policy{\textquoteright}s\ Marginal Value of Public Funds, or its {\textquotedblleft}MVPF{\textquotedblright}. Comparing MVPFs across policies provides\ a unified method of assessing their impact on social welfare. Our results suggest that direct\ investments in low-income children{\textquoteright}s health and education have historically had the highest\ MVPFs, on average exceeding 5. Many such policies have paid for themselves as governments\ recouped the cost of their initial expenditures through additional taxes collected and reduced\ transfers. We find large MVPFs for education and health policies amongst children of all ages,\ rather than observing diminishing marginal returns throughout childhood. We find smaller\ MVPFs for policies targeting adults, generally between 0.5 and 2. Expenditures on adults have\ exceeded this MVPF range in particular if they induced large spillovers on children. We relate\ our estimates to existing theories of optimal government policy and we discuss how the MVPF\ provides lessons for the design of future research.}, url = {https://academic.oup.com/qje/article/135/3/1209/5781614}, author = {Nathaniel Hendren and Sprung-Keyser, Ben} }