POSITIER P olicy O riented S takeholder and I nvestor T esting for I nnovative and E ffective R egulation Brian Scholl Chief Architect POSITIER Principal Economic Advisor and Senior Economist U.S. Securities and Exchange Commission, Office of the Investor Advocate The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. Therefore, the views expressed today are our own, and do not necessarily reflect the views of the Commission or the other members of the staff of the Commission.
Vision • Test effects of policies on investors before rolling out • Increase effectiveness of regulations and SEC as regulator • Measure and monitor developments with investors and other financial market participants • Estimate effects of policies and other activities • Promote evidence-driven policymaking and a culture of learning • Encourage outcome-oriented performance metrics in tracking organizational effectiveness • Integrate academic and policy research into the policymaking process on issues of household finance 2 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Investor Testing: Multi-Mode Multi-Purpose Data Collection ADMINSTRATIVE DATA Measurement Impact Evaluation Testing (Design of (Investor Tracking) (Organizational Regulations) Outcomes Effectiveness) (often) Ex-post testing Ex-Ante testing Contemporaneous framework framework 3 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Surveys: A Puzzle Piece • Investor testing is not surveys, but surveys key measurement tool • Opinion polls limited in value: – Often insufficient data collected for analysis – Rarely used in serious quantitative studies – Ambiguous results - Actionable policy implications? • High Quality Measurement Surveys: – Can help measure contemporary economic conditions – Accuracy and frequency crucial to utility – Measurement surveys: “how are things going?” 4 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Q: Will the rule work? METHOD: SURVEY TEST 50% Disclosure A Outcomes Disclosure B 50% Outcomes 5 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Q: Will the rule work? METHOD: FIELD TEST 50% Proxy vote participation rate 50% 6 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Iterative Rapid Deployment Partnership Rapid: • Flexible Contracting Framework • High quality, probability-based surveys • Reduces: costs, development time Iterative: • Research findings inform future research endeavors Partnership: • OIAD takes the lead in developing tests with academic partners, rather than relying on handoff to contractors. 7 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Iterative Research Model Testing- focused Data Collection N 4 Initial Qualitative/ Analysis of Quantitative Results Research 3 5 Additional Assess Study in this State of Phase Identify Knowledge Needed? Topic, (Y/N) Assess Next Phase Feasibility of Research and Scope or Terminate Research Project Y 8 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Indicative Development Plan: Phase I: focus on Topical Research Streams • Discrete/finite research studies • Collect qualitative and quantitative data • Focus: estimation of treatment effects • Launch 1-2 topics/year • May involve multiple, iterative tests Retail Disclosure Effectiveness Retail Proxy Voting Corporate Disclosure Effectiveness (Issuer Investor Perceptions and Participation Side) 9 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
Indicative Development Plan • Phase II: Periodic Measurement Surveys – Complement and leverage other public-use microdatasets – Frequency conducive to academic and policy needs – Useful to academic community – public use microdatasets – Integrate with agency performance management U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E | 10
Conclusion • Thank you to all who have been so supportive • An endeavor that everyone can get behind • Leadership support is crucial • Want to change culture over time 11 U . S . S E C U R I T I E S A N D E X C H A N G E C O M M I S S I O N | O F F I C E O F T H E I N V E S T O R A D V O C A T E |
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