Economics provides a rich toolkit to muster evidence and make rational public policy choices.
Evidence-based policy demands the use of appropriate statistical and econometric techniques, and the careful design of surveys and policy trials.
Economic analysis should be central to policymaking. Cost-benefit analysis is indispensable and should be undertaken as best practice.
We assist public policy-makers in understanding the effects of their choices on stakeholders. We help stakeholders in making coherent and forceful policy arguments.
Who wins and loses under different policies? Can we quantify their respective costs and benefits? How do we strike optimal trade-offs? What do we do about risk and uncertainty? What weight do we give future generations? Even where data is limited, economics can provides a framework for answering these questions and establishing the likely order of magnitude of costs and benefits.
DotEcon has worked extensively with both public bodies and private companies facing policy questions in a range of sectors, including telecommunications, financial services, transportation and energy markets.
We offer expertise in a full range of techniques to support our clients, including:
- Cost-benefit analysis, using both data-driven and theory-driven approaches;
- Regulatory impact assessments;
- Customised market research, including conjoint and hedonic methods; and
Benchmarking of international practice.
Too few turtle doves
Since the 1970s, the turtle dove population in Britain has dwindled by 98% to only 3600 breeding pairs in 2016. The EU's farming geared agricultural policy led to a lack of diverse natural habitats for wildlife to thrive in. Post-Brexit, the UK government set up initiatives to reverse this, in one of which we paired with conservationists in an effort to rehabilitate turtle dove habitats.
We proposed that an advanced reverse auction using farmers’ bids to create and maintain habitats could allocate conservation payments from the government in a way that would maximise the ecological benefits of the funds.
In this case, winner determination algorithms were complex, as the auction must take into account existing land features and the unique complementarities found in a successful turtle dove habitat. Additionally, we did not want to treat bids in isolation, but to analyse existing land features and those from neighbouring farms together to create the best possible local habitats. These considerations formed the basis for our proposal of regional, combinatorial auctions, the first of which ran in 2021 in four areas across Norfolk and Suffolk.
More details on this project can be found here.
WiFi with your latte
Few people browsing the web while sipping their coffee or relying on network connectivity when working from a coffee show realise that being able to do so not only requires the right technology but also the right regulatory framework.
Historically, businesses and organisations in the UK were not permitted to provide WiFi in public spaces without an individual licence and licensing costs might have been prohibitive for many smaller organisations.
We were commissioned by the UK Radiocommunications Authority - one of Ofcom's predecessors - to look at the potential benefits of opening up licence-exempt spectrum for use by public WiFi networks. Informed by industry feedback and data on subscriber numbers and pricing, along with assumptions on take up and competition, we estimated the change could bring £500 million per annum in consumer surplus, primarily through new services and innovation. On this basis, we recommended that the restrictions on the use of unlicensed spectrum for public services be lifted.
With public WiFi hotspots now being ubiquitous and having become a part of everyday life, our estimate is likely to be have been very conservative, but it contributed to the timely lifting of regulatory restrictions that would have held back these developments.
Network connectivity has become such an important part of our lives that outages are hard to bear. However, providing redundancy across networks is costly and even if customers were prepared to pay for greater resilience, reliable information about the relative performance of different suppliers is often unavailable and difficult to evaluate.
To inform potential regulatory intervention for improved network resilience, we were asked to assess the economic and social impact of poor network resilience and network incidents based on an accurate evaluation of the relevant costs. We addressed this question using data on reported downtimes (from Downdetector) and our own survey results from almost 2000 respondents, combined with data on weather, electrical outages, population density and homeworking behaviour.
Based on this analysis, the total value of unmet demand for reliability across all households was estimated to be €160m per annum. The private benefits from households could justify an investment of €2 billion in securing a reliable network, whilst external benefits could easily be three times this amount. The geographical pattern of network outages could not be summarised with a simple urban/rural split. Heavier use of the internet, few backhaul networks, and copper-based xDSL and satellite broadband connections contribute to customers experiencing more outage hours. These conclusions suggest the areas which could most benefit from government incentives or obligations on private operators to invest in increased redundancy.
Find our full report here.