Which federal programs and policies succeed in being cost-effective and targeting those who need them most? These two tests are obvious: After all, why would we spend taxpayers' money on a program that isn't worth what it costs or helps those who do not need help? Yet as I show in my new book, "Why Government Fails So Often: And How It Can Do Better," most domestic federal programs have not been shown to meet even these minimal standards. A smattering of the numerous examples: farm subsidies, flood insurance, ethanol requirements, Amtrak, student loans and many housing programs. All the more reason, then, to study the successes to learn from them.
To this end, I selected for closer analysis a dozen programs that academic studies generally consider successful. Three were implemented long before cost-effectiveness analysis: the Homestead Act of 1862, which distributed the government's vast western lands, cheaply, for settlement and cultivation; the Morrill Act of 1862, which granted land for agricultural and technical colleges; and the GI Bill, which subsidized higher education for veterans. The other nine programs generally receive high marks from economists for both cost-effectiveness and targeting of the groups they're intended to benefit. (Not on this list, notably, are Medicare and much environmental regulation. While they're popular and confer large benefits, they're also far costlier than they should be - Medicare because it is built on top of a notoriously inefficient health care system, and environmental regulation because so much of it is heavy-handed and creates poor incentives.)
In looking closely at my top 12 programs, I could find no single formula for success, but I did identify some important attributes that made each program successful. Here's my list of the best strategies government has shown it can deploy: