Can the U.S. Government Go Moneyball?

In an excerpt from their new book, two former Office of Management and Budget directors ask whether or not a focus on numbers and hard evidence—not emotion—could transform American governance.

12.23.14 10:45 AM ET

Between August 13 and September 4, 2002, the Oakland Athletics baseball team didn’t lose a single time. For twenty consecutive games—an American League record—a team of misfits and overlooked talent dominated Major League Baseball like never before. And they did so, incredibly, on a budget of just $40 million—less than a third that of the league’s richest teams.

Oakland’s success came about not in spite of their measly resources but because of them. Recognizing that his team could never compete in a system where only the wealthiest could be winners, Billy Beane, the team’s general manager, began identifying and exploiting inefficiencies in the game that other teams hadmissed. He embraced his team’s scarce resources and let statistics, not unscientific scouting reports, drive his draft picks. The rest of the league could play baseball; Billy Beane and the Oakland A’s were playing “Moneyball.”

It’s a compelling story, especially in the hands of a writer like

Michael Lewis, who coined the term and penned the 2003 bestselling book of that name. At its heart, Moneyball is about crunching numbers and relying on hard evidence—not emotion or tradition—to drive decisions about how to allocate scarce resources. It’s also about determining what data matter and what don’t (in the case of baseball, concluding that on-base percentage matters a lot more than total home runs). When it comes down to it, it’s a way to get more with less.

Which raises important questions: Can data, evidence, and evaluation similarly revolutionize America’s government? Can we provide better services to millions more Americans while actually saving billions of dollars? Can we make this country a better place for children and families by investing in what works, by testing it and retesting it, and by holding ourselves to a higher standard?

In short, can government play Moneyball?

The answer, we believe, is a resounding yes.

It might seem obvious that the government, which collects more than $2.4 trillion in taxes each year (and spends more than $3 trillion), would want to know whether it is spending that money effectively. But too often we lack the answer to that very important question. In fact, astonishingly, based on our estimate, less than one dollar out of every hundred dollars the federal government spends is backed by even the most basic evidence. We might know a program is popular. We might even see data that suggest the program is performing efficiently. But it is the relatively rare case when we actually have the evidence to tell us a program is working as intended and it’s the most effective way to achieve the outcome we desire.

Federal programs might be working; but in too many cases, we just don’t know. With the mounting challenges our nation is facing, it is not enough to base government spending on intuition, instinct, or—the overwhelming rationale for most programs—what has been funded in the past. That is especially important given that, very often, when we do investigate the efficacy of federal programs, the results are not encouraging. Since 1990, the federal government has rigorously tested ten large social programs through randomized controlled trials (RCTs), the gold standard of evaluation. Of the ten programs—which collectively cost taxpayers over $10 billion annually—nine showed “weak or no positive effects” on their participants.

This would be a problem under any circumstance—after all, as former Senate minority leader Everett Dirksen is famously said to have remarked, “A billion here, a billion there, and pretty soon you’re talking real money.” But in the wake of the 2008 recession and recent budget agreements—with jobs and GDP growing modestly, discretionary spending under tight caps, and cash-strapped governments struggling to do more with less—it’s even more critical that we maximize the impact of every taxpayer dollar we invest.

Ultimately, this is a debate about genuinely improving the lives of children and their parents by making sure we are spending our resources in the right way. And while these debates tend to play out in the abstract language of dollars and cents, the impact is not merely seen in columns in an Excel spreadsheet or line items in an omnibus budget bill. Our failure to assess the effectiveness of government spending carries more than a financial cost—it has a massive human cost as well. When a program designed to boost employment fails to perform, parents are unable to put food on their families’ tables. When an education initiative doesn’t live up to its promise, neither can the young children enrolled in it.

Fortunately, it doesn’t have to be this way. Thanks to decades of social-science research, we know more about how to help struggling Americans than ever before. And in this era of impact-blind, across-the-board budget cuts, we see an opportunity. Like Billy Beane and the A’s, these lean times offer us a chance to reevaluate how we measure success and to shift our focus to what works.

First, we need to change the debate—to focus at least as much on the quality of resources as the quantity. Our goal is to get policy makers to adopt three principles that we believe can improve outcomes for young people, their families, and their communities:

1. Build evidence about the practices, policies, and programs that will achieve the most effective and efficient results.

2. Invest limited taxpayer dollars in practices, policies, and programs that use evidence and evaluation to demonstrate that they work.

3. Direct funds away from practices, policies, and programs that consistently fail to achieve measurable outcomes.

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The good news is, the government has already begun to play Moneyball in some areas. During the administration of President George W. Bush—America’s first MBA president as well as a former Major League Baseball–team owner—the Office of Management and Budget (OMB) developed a Program Assessment Rating Tool (PART) to evaluate social programs and adjust funding according to their success. The Obama administration took up the baton in 2009 and has since become the most evidence-based administration in history.

Take, for example, the popular Head Start program, which spends $8 billion annually providing early-childhood education, health, and nutrition assistance to nearly a million disadvantaged children. Ever since it was created in 1965, politicians and researchers have studied and debated its effectiveness. Supporters pointed to math and literacy gains, while critics noted that those improvements disappeared in elementary school.

In 2007, President Bush signed a law that required all Head Start grantees to be evaluated using an evidence-based system. President Obama has since initiated a series of targeted reforms to weed out underperforming providers and has refused to automatically fund about one-third of programs. In order to re-qualify, they would have to improve.

To be sure, the evidence-based agenda we are proposing isn’t just about identifying programs that aren’t working; it’s about scaling up those that are, and improving those that show promise. Consider Nurse-Family Partnership, one of the best examples of evidence in action. Early in his career, David Olds worked at a day-care center in inner-city Baltimore, where he hoped to change the lives of low-income children. But to his frustration, he found that, even by preschool age, many of the children he worked with were already at an enormous developmental and educational disadvantage. Rather than give up, David changed his approach, deciding to focus his efforts even earlier—in some cases, before the child is even born.

He created an organization called Nurse-Family Partnership, which sends nurses to the homes of first-time, low-income mothers and their children. There they would help women prepare for everything from the birth itself to raising a baby, planning future pregnancies, staying in school, and preparing for the workforce.

“When a woman becomes pregnant, whether she’s fourteen or forty, there’s a window of opportunity,” explained Valerie Carberry, a nurse for the program. “They want to do what’s right. They want to change bad behaviors—tobacco, alcohol, using a seat belt, anything. As nurses, we’re able to come in and become part of their lives; it’s a golden moment.”

But Olds did more than build Nurse-Family Partnership; he did the rigorous evaluation to prove it would work. Over the next thirty years, he tested the program in randomized trials in three different communities. His results showed that the program was a remarkable success—improving pregnancy outcomes, bolstering the health and development of children, and helping parents create a positive life course for themselves. He took that evidence and the support of modest private funding to scale his program, from just a few locations to more than forty states by 2013. And in proving the effectiveness of the program, the organization was able to help secure a $1.5 billion federal investment in similar programs around the country. That funding was set to expire in 2014, but Congress has extended the program once already on a bipartisan basis and is likely to do so again in the future. Home visitation is a great example of building political support the right way—by doing what works.

The move toward more analytical policy making is encouraging.

From the Obama administration’s Social Innovation Fund to New York City’s Center for Economic Opportunity, we are seeing more and more examples of policy making based on data and evidence that makes a meaningful impact.

We’re not naïve: we know from personal experience that overhauling how the federal government does business isn’t easy.

While local, state, and federal governments have made positive strides, scaling up a handful of promising pilot programs into a completely reimagined framework for governance presents some real challenges.

For one thing, policy makers’ incentives aren’t always aligned with the imperative to squeeze the most impact out of every dollar. Sometimes politicians oppose reform for nefarious reasons—to protect a special interest or a major donor, for example. Sometimes they protect a program because of who started it, whose pet project it was, rather than whether it’s working. For too many members of Congress, when it comes to evidence, it’s just easier not to know.

All of that is before you consider our current political environment, which is, to put it charitably, not particularly conducive to making major changes. In truth, it’s downright dysfunctional—so polarized and toxic that Democrats and Republicans can hardly stand to be in the same room together, let alone overhaul our approach to governance. And in the rare instances when our elected officials manage to forge bipartisan consensus, legislation is still often blocked for petty political reasons. To anyone watching thecurrent mess in Washington, it’s not surprising that from 2011 to 2013, Congress passed fewer bills than any Congress in more than half a century.

But while the obstacles to evidence-based governance are formidable, they are not insurmountable. In fact, there are a number of good reasons to be optimistic.

First, there is a political opportunity for both parties. Republicans will have the chance not only to identify and eliminate real waste in the system but also to prove that a smaller government can be a more effective government. Democrats, on the other hand, will be able to fine-tune government until it is smarter and works better, and leverage it to better deliver services to vulnerable populations. There is nothing ideological about this approach, which is why we’ve already seen broad bipartisan support for these ideas.

Second, there is an economic opportunity. Researchers have projected, for example, that closing the achievement gap would boost GDP by 3 to 5 percent. By collecting—and then leveraging—evidence to improve the way we approach this challenging problem, we can dramatically improve our economic footing.

Already, we’ve witnessed policy makers seizing these opportunities. In Texas and many other states, where the prison systems are straining budgets, die-hard conservative Republicans have joined with Democrats to reform the state’s criminal-justice system. This has saved money (a Republican priority) while simultaneously creating humane alternatives to incarceration (a longtime goal for Democrats).

Finally, there is a moral opportunity. Regardless of party, those who work in government do so because they care about helping their fellow citizens. And right now, we’re not doing all that we could be. Half of low-income fourth graders aren’t even reading at a basic level—yet we know there are proven ways to change that. One out of every fifteen African American men is in jail—yet we know that good evidence can change that, too.11 So let’s build that evidence, analyze it, and use it as a tool to do a better job ofrunning this country.

That, in a nutshell, is the case for Moneyball. It might sound like a basic idea, but it’s also a big idea. As Billy Beane explained to Peter Brand, his prized statistician, “If we win, on our budget, with this team ... we’ll have changed the game. And that’s what I want.” That’s what we want as well: to change the game, to get government working better, and to brighten the opportunity of and possibilities for everyone who calls America home.

So, ladies and gentlemen, let’s play Moneyball.

Excerpted from Moneyball for Government, published by Disruption Books, and reprinted with permission. Copyright © 2014.