The Policy Impacts Library
MVPF Explained
- What is the MVPF?
  The MVPF methodology allows decision makers to compare the impacts of different types of policies and identify policies that have the highest returns on investment.
  START HERE
- Using the MVPF
  See stylised and real world examples that demonstrates the MVPF methodology in action.
  LEARN TO USE
- MVPF Lessons
  Explore the MVPF’s five key findings by analyzing over 100 US policy changes.
  SEE THE LESSONS
- Questions About the MVPF
  Explore answers to the most commonly asked questions about the MVPF and its application to policy analysis.
  VIEW THE FAQS

MVPF Lessons

The MVPF is a valuable tool because it serves as a unifying measure for policy analysis. In recent work, the Principal Investigators at Policy Impacts have used the MVPF to draw lessons from historical US policies.

We analyzed 133 historical policy changes in the U.S. over the past half century.

We analyze policies spanning social insurance (e.g. health and disability insurance), education and job training (e.g. preschool spending and college subsidies), taxes and cash transfers (e.g. top tax rate changes or expansions of the earned income tax credit), and in-kind transfers (e.g. housing vouchers and food stamps.)

That research produced the following 5 lessons:

Lesson One

Direct investments in the health and education of low-income children yield the highest returns

Lesson One

Direct investments in the health and education of low-income children yield the highest returns

Lesson One

Direct investments in the health and education of low-income children yield the highest returns

Lesson One

Direct investments in the health and education of low-income children yield the highest returns

Lesson Two

MVPFs are high throughout childhood

Lesson Two

MVPFs are high throughout childhood

Lesson Two

MVPFs are high throughout childhood

Lesson Two

MVPFs are high throughout childhood

Lesson Three

Some direct investments in low-income children’s health and education pay for themselves.

Lesson Three

Some direct investments in low-income children’s health and education pay for themselves.

Lesson Three

Some direct investments in low-income children’s health and education pay for themselves.

Lesson Three

Some direct investments in low-income children’s health and education pay for themselves.

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Four

MVPFs are generally lower for policies targeting adults

Lesson Five

There are important exceptions to all general patterns

Not every policy targeting children has a high MVPF. Despite the general patterns presented here, some policies targeting children yield low MVPFs. For instance, we find low returns for youth job training programs and college subsidies when they don’t significantly increase attainment. We also find lower MVPFs for transfers to disabled children and their families. This reinforces the important reality that the MVPF alone does not determine which expenditures are desirable or undesirable. Rather, it measures the budgetary tradeoffs associated with different types of policies.

We find that spending on adults can result in high MVPFs if those policies have positive spillover effects on children. For example, the provision of vouchers and counseling services in the Moving to Opportunity experiment helped families move to lower-poverty neighborhoods. The resulting improvement in childhood environments led to large increases in children's earnings that generated sufficient tax revenue to pay for the program cost. These results highlight the need for further work to uncover when such spillovers are likely to occur.

We also find high MVPFs for historical reductions in the top marginal tax rate in the 1980s when those rates were 50% or above. As we document in the academic paper, however, these estimates contain considerable statistical uncertainty. For a policy such as the 1981 reduction in top tax rates, we cannot rule out an infinite MVPF nor can we rule out an MVPF of 1.

Questions about the MVPF?

See FAQs