A Methodological Toolkit to Understand Complex Policy Problems: Applications to Climate Change and Illicit Finance

Abstract

Complex policy problems like climate change and illicit finance require a diverse methodological repertoire and an agnostic approach to selecting the appropriate analytical tool to accomplish discrete inferential tasks. Drawing from the disciplines of political science, economics, and statistical data science, this dissertation tackles three distinct problems on causal evaluation, measurement, and missing data.

Chapter 1 evaluates the causal effect of a climate mitigation policy on the carbon emissions of the UK. Using a synthetic control estimator, this chapter finds that post-treatment emissions in the UK were 10% lower than what they would have been without the climate reform. The results imply that unilateral climate policies can meaningfully reduce emissions despite the absence of a legally binding global climate agreement.

Chapter 2 presents a novel methodology to measure illicit trade flows and originates the "atlas of misinvoicing", the first database to provide comprehensive bilateral estimates of the dollar amount of misinvoiced trade disaggregated by commodity sector for 167 countries during 2000-2018. Results show that African countries lost on average $86 billion a year in gross illicit outflows during that period, and that the biggest source of illicit trade on the continent was the natural resources sector. The findings suggest that combating illicit financial flows will be crucial to provide finance for sustainable development and to promote domestic resource mobilization in poor countries.

Chapter 3 proposes a machine learning approach to ameliorate the problem of missing data from developing countries, where administrative systems for data collection tend to be weaker. Some low-income countries do not provide customs declarations, which the "atlas" method requires as input data. This chapter predicts illicit trade using machine learning models that are trained on readily available data without relying on official trade statistics. Findings show that the models are able to recover 70% of the variation in illicit trade outcomes. This demonstrates the promise of predictive approaches to augment existing measures of illicit finance in data-constrained settings.

Broadly, the chapters in this dissertation can be understood as operating in the different scientific frameworks of causal, descriptive, and predictive inference, respectively. Tackling difficult environmental and developmental problems will require a willingness to traverse methodological siloes in order to identify the best tool for the job – this dissertation contributes to pushing the search for solutions forward.

Bio

Alice Lépissier is a political economist and applied statistician with a decade of experience in international development and climate policy. Prior to joining the Bren School, Alice was a Research Associate at the Center for Global Development, where she conducted empirical research on climate change and illicit financial flows in order to develop practical policy proposals and drive evidence-based policy-making. Her work bridges the research and policy interface by designing intuitive tools to aid decision-making. Alice is the creator of SkyShares.org, an interactive tool for policy-makers to simulate the economic consequences of climate deals. She is the developer of the illicit flows vulnerability database that is used by the Tax Justice Network’s online tracker tool, and she has more recently produced the trade misinvoicing estimates used by the United Nations Economic Commission for Africa. She was a contributor to the UN’s 2015 Report from the High Level Panel on Illicit Financial Flows from Africa, which explicitly created the political mandate to combat illicit financial flows on the continent and globally, and which obtained unanimous backing by the African Union.

Alice has also worked for the African Secretariat of ICLEI – Local Governments for Sustainability in Cape Town and has consulted for various international and non-governmental organizations. Her work has been published in numerous policy reports, in the academic journals Climatic Change and Journal of International Development, and she has written for the general public in The Guardian and Views from the Center for Global Development.

Alice holds an MA in Statistics from UC Santa Barbara, an MSc in Economic History from the London School of Economics, and an MSc in Economics and Public Policy from Sciences Po Paris and École Polytechnique. She graduated with First Class Honours from University College London with a BA in European Social and Political Studies.

After graduation, Alice will be moving to Providence, RI, where she is an incoming Postdoctoral Fellow at the Watson Institute for International and Public Affairs at Brown University, with joint affiliations with the Climate Solutions Lab and the Rhodes Center for International Economics and Finance. At Brown, Alice will be working on climate finance and how to pay for decarbonization.