Punctuations in Policy Outputs: What Does Policy Design Have to Do with It?

An enduring challenge confronting policymakers is how to design and modify policies to yield outputs consistent with policy goals. This challenge would be made easier with more understanding about how changes to different elements of policy design impact policy outputs. Our paper links together scholarship on policy design and punctuated equilibrium theory in assessing whether changes in policy targets, policy instruments, and policy incentives have differing effects on the distributions of changes in policy outputs. In doing so, we test the implication that better designed institutions ought to change policies sufficient to produce outputs that respond to actual rather than concatenated demand. Our empirical examination is a study of net metering policy in the United States over the years 2007-2016. Our analysis finds a relationship between policy designs that change more frequently and less punctuated distributions of outputs. Further, that changes to certain elements of policies are related to a greater frequency of gradual changes in policy outputs than changes to others. We conclude the paper with a discussion of the theoretical and practical implications of this research beyond the case of net metering policy.