Naming and shaming in a 'fair' way. On disentangling the influence of policy in observed outcomes

Naming and shaming is a frequently applied incentive by supra-national organizations. Although common practice, a mere comparison between the outcome variable is meaningless. The observed outcome variable consists of two parts: (1) a part which is due to the general economic climate and where the policy maker does not have an influence on; (2) a ‘net’ part which is the direct result of policy interventions. This paper suggests a regression model to estimate the net policy outcome. The proposed linear panel data model accounts for short and long term economic influences, as well as time and country fixed effects. This yields an indication on the effect attributed to policy making. It is applied to early school leaving outcomes, which increasingly attract attention since recent policy actions stipulated in, e.g., the Lisbon Agenda or the No Child Left Behind Act. Despite Portugal’s best performance in the traditional naming and shaming model, once controlled for non-direct policy influences, the results indicate that Luxembourg and the Netherlands can be named, while Portugal and Spain should be shamed.