Can Government Play Moneyball?

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the atlantic

By John Bridgeland and Peter Orszag, The Atlantic

Based on our rough calculations, less than $1 out of every $100 of government spending is backed by even the most basic evidence that the money is being spent wisely. As former officials in the administrations of Barack Obama (Peter Orszag) and George W. Bush (John Bridgeland), we were flabbergasted by how blindly the federal government spends. In other types of American enterprise, spending decisions are usually quite sophisticated, and are rapidly becoming more so: baseball’s transformation into “moneyball” is one example. But the federal government—where spending decisions are largely based on good intentions, inertia, hunches, partisan politics, and personal relationships—has missed this wave.

Allow us to share some behind-the-scenes illustrations of what our crazy system of budgeting looks like—and to propose how the lessons of moneyball could make our government better.

When one of us (Peter) began his tenure as the director of the Congressional Budget Office in 2007, he took a Willie Sutton approach to the nation’s huge and growing fiscal mess: he went after health care, which makes up roughly a quarter of the federal government’s spending, because that’s where the money is.

The moneyball formula in baseball—replacing scouts’ traditional beliefs and biases about players with data-intensive studies of what skills actually contribute most to winning—is just as applicable to the battle against out-of-control health-care costs. According to the Institute of Medicine, more than half of treatments provided to patients lack clear evidence that they’re effective. If we could stop ineffective treatments, and swap out expensive treatments for ones that are less expensive but just as effective, we would achieve better outcomes for patients and save money.

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