Sensemaking
#1Key Findings
Denmark is the SGI 2024’s top performer (rank 1) in the category of sensemaking.
Fiscal policy is rule-based, focusing on medium- and long-term sustainability of public finances. The Ministry of Finance plays a key role in strategic planning, creating plans with 10-year horizons. These plans emphasize the financial sustainability of public finances and the welfare model.
Regulatory impact assessments are mandatory for all proposed legislation and regulations. They analyze economic, administrative and environmental consequences for governments, businesses, and the public, with a focus on sustainability. RIAs are publicly available, and policies are often adjusted based on their findings, depending on the level of public attention.
Denmark has a tradition of quantifying both the short- and long-term effects of economic policies through various models. While there is no legal requirement for ex post evaluations of public policies, these assessments do occur through numerous formal and informal channels.
Fiscal policy is rule-based, focusing on medium- and long-term sustainability of public finances. The Ministry of Finance plays a key role in strategic planning, creating plans with 10-year horizons. These plans emphasize the financial sustainability of public finances and the welfare model.
Regulatory impact assessments are mandatory for all proposed legislation and regulations. They analyze economic, administrative and environmental consequences for governments, businesses, and the public, with a focus on sustainability. RIAs are publicly available, and policies are often adjusted based on their findings, depending on the level of public attention.
Denmark has a tradition of quantifying both the short- and long-term effects of economic policies through various models. While there is no legal requirement for ex post evaluations of public policies, these assessments do occur through numerous formal and informal channels.
Graph View
Graph View
To what extent can the central government foster the capacity for strategic foresight and anticipatory innovation within its organization?
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9
9
The central government can foster the capacity for strategic foresight and anticipatory innovation within its organization.
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7
6
7
6
Most of the time, the central government can foster the capacity for strategic foresight and anticipatory innovation within its organization.
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4
3
4
3
The central government is rarely capable of fostering the capacity for strategic foresight and anticipatory innovation within its organization.
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1
1
The central government is not capable of fostering the capacity for strategic foresight and anticipatory innovation within its organization.
For several years, Denmark’s fiscal policy has been rule-based, prioritizing medium-term and long-term issues and the sustainability of public finances. The Ministry of Finance plays a central role in initiating and coordinating strategic planning. This role is most evident in the formulation of overarching strategic policy plans, typically with a horizon of about 10 years, such as the government’s 2010, 2015, 2020 and most recently, 2025 plans (Andersen 2024).
A common theme in the plans is the financial sustainability of public finances, and thus the welfare model, under the influence of an aging population. Current policies meet the criterion of fiscal sustainability, a distinction held by few countries. A primary focus of the medium-term plans is to ensure that public expenditures and revenues are on a path consistent with fiscal sustainability. Increasingly, environmental policies are included in strategic planning to ensure the targets set in the Climate Law are met.
The plans typically include various possible “what if” paths for economic development as a means of discussing potential future trajectories, as well as policies intended to influence how the economy evolves.
An agency under the Ministry of Finance, the Agency for Public Finance and Management, is responsible for developing methods and providing cross-ministry networks that serve as meeting points for information sharing. It has also served as a vehicle for rolling out new assessment tools throughout the public sector. At times, this has led to public criticism of the agency. Additionally, it is quite common to appoint expert groups to prepare inputs for important policy discussions and reforms. The members of these groups can be experts, representatives of organizations or civil servants.
Citations:
Andersen, T.M. 2024. “Fiscal Stabilisers in Denmark.” Nordic Economic Policy Review, to appear.
A common theme in the plans is the financial sustainability of public finances, and thus the welfare model, under the influence of an aging population. Current policies meet the criterion of fiscal sustainability, a distinction held by few countries. A primary focus of the medium-term plans is to ensure that public expenditures and revenues are on a path consistent with fiscal sustainability. Increasingly, environmental policies are included in strategic planning to ensure the targets set in the Climate Law are met.
The plans typically include various possible “what if” paths for economic development as a means of discussing potential future trajectories, as well as policies intended to influence how the economy evolves.
An agency under the Ministry of Finance, the Agency for Public Finance and Management, is responsible for developing methods and providing cross-ministry networks that serve as meeting points for information sharing. It has also served as a vehicle for rolling out new assessment tools throughout the public sector. At times, this has led to public criticism of the agency. Additionally, it is quite common to appoint expert groups to prepare inputs for important policy discussions and reforms. The members of these groups can be experts, representatives of organizations or civil servants.
Citations:
Andersen, T.M. 2024. “Fiscal Stabilisers in Denmark.” Nordic Economic Policy Review, to appear.
Graph View
To what extent does the government conduct high-quality impact assessments to evaluate the potential effects of prepared legislation before implementation?
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9
9
The government draws on high-quality RIAs to assess the potential impact of prepared legislation before implementation.
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7
6
In most cases, the government draws on high-quality RIAs to assess the potential impact of prepared legislation before implementation.
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3
4
3
The government rarely draws on high-quality RIAs to assess the potential impact of prepared legislation before implementation.
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1
The government does not draw on high-quality RIAs to assess the potential impact of prepared legislation before implementation.
For all proposed legislation and administrative regulations, there is an explicit requirement that impact assessments be carried out to determine the economic and administrative consequences for state and local governments, the effects on businesses, and the environmental impact. The relation to EU legislation must also be assessed.
Consideration of consequences begins during the initial review of a new law or regulation (screening stage), and continues as the content and scope of the new measures are evaluated (scoping stage). A detailed RIA is then developed during the final stage (assessment stage).
When new legislation is based on EU legislation, the impact assessment will be included in the document (samlenotat) that goes to the European Affairs Committee in the parliament. According to a rough estimate, about 40% of new Danish legislation is based on or related to EU regulations. In recent years, more emphasis has been placed on evidence-based policies in areas such as labor market and social policies, for example. Evaluations have been explicitly integrated into policy formulation processes and, in the case of labor market policies, some experimental studies regarding activation programs have been drawn upon.
Following the long tradition of an open public sector, RIAs are publicly available, and when they suggest that a given policy is not providing the expected results, a policy change often follows. However, the speed of this change depends to some extent on the level of public attention the issue attracts.
There is a long tradition of quantifying both short-run and long-run effects of economic policies, and numerous models have been developed for this purpose. These include the Annual Danish Aggregate Model (ADAM) model used by the Ministry of Finance and the Simulation Model of the Economic Council (SMEC) model used by the Council of Economic Advisers. Over the years, these models have been refined and updated. Although the two models are not drastically different, their use has fostered an environment of openness and transparency in the quantitative assessments of fiscal policy effects.
A newly developed model, MAKRO, will soon be used by the Ministry of Finance. Among the key features of this dynamic model is its ability to merge short-term effects with long-term structural aspects. Additionally, there is a Green Reform model to quantify the effects of environmental and climate policies (see Kirk et al., 2024).
Citations:
Kirk, J. S., et al. 2024. Development of the GreenREFORM Model. Sharing Learnings from Development of the Climate and Energy-Economic CGE-Model GreenREFORM. Copenhagen: Danish Research Institute for Economic Analysis and Modelling.
https://dreamgroup.dk/Media/638493769228252341/Development_of_the_GreenREFORM_model.pdf
Christiansen, Peter Munk, Jørgen Grønnegård Christensen and Martin Bækgaard. 2022. Politik og forvaltning. Copenhagen: Hans Reitzel.
Consideration of consequences begins during the initial review of a new law or regulation (screening stage), and continues as the content and scope of the new measures are evaluated (scoping stage). A detailed RIA is then developed during the final stage (assessment stage).
When new legislation is based on EU legislation, the impact assessment will be included in the document (samlenotat) that goes to the European Affairs Committee in the parliament. According to a rough estimate, about 40% of new Danish legislation is based on or related to EU regulations. In recent years, more emphasis has been placed on evidence-based policies in areas such as labor market and social policies, for example. Evaluations have been explicitly integrated into policy formulation processes and, in the case of labor market policies, some experimental studies regarding activation programs have been drawn upon.
Following the long tradition of an open public sector, RIAs are publicly available, and when they suggest that a given policy is not providing the expected results, a policy change often follows. However, the speed of this change depends to some extent on the level of public attention the issue attracts.
There is a long tradition of quantifying both short-run and long-run effects of economic policies, and numerous models have been developed for this purpose. These include the Annual Danish Aggregate Model (ADAM) model used by the Ministry of Finance and the Simulation Model of the Economic Council (SMEC) model used by the Council of Economic Advisers. Over the years, these models have been refined and updated. Although the two models are not drastically different, their use has fostered an environment of openness and transparency in the quantitative assessments of fiscal policy effects.
A newly developed model, MAKRO, will soon be used by the Ministry of Finance. Among the key features of this dynamic model is its ability to merge short-term effects with long-term structural aspects. Additionally, there is a Green Reform model to quantify the effects of environmental and climate policies (see Kirk et al., 2024).
Citations:
Kirk, J. S., et al. 2024. Development of the GreenREFORM Model. Sharing Learnings from Development of the Climate and Energy-Economic CGE-Model GreenREFORM. Copenhagen: Danish Research Institute for Economic Analysis and Modelling.
https://dreamgroup.dk/Media/638493769228252341/Development_of_the_GreenREFORM_model.pdf
Christiansen, Peter Munk, Jørgen Grønnegård Christensen and Martin Bækgaard. 2022. Politik og forvaltning. Copenhagen: Hans Reitzel.
To what extent does the government effectively incorporate sustainability assessments within the framework of RIAs?
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High-quality sustainability assessments are incorporated within regulatory impact assessments.
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High-quality sustainability assessments are, for the most part, incorporated within regulatory impact assessments.
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High-quality sustainability assessments are rarely incorporated within regulatory impact assessments.
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Sustainability assessments are not incorporated within regulatory impact assessments.
When RIAs are conducted, they must cover all positive or negative consequences of an economic, administrative or environmental nature that are likely to affect the state, municipalities, regions, business, citizens or relations with the European Union. This includes questions of sustainability. Sustainability is a central concern in government policy and includes economic, fiscal and environmental sustainability.
Since the enactment of the Climate Law, the Climate Council has produced a yearly report assessing whether current policies are sufficient to meet the emission goals set in the law. The council is independent from ministries and has its own secretariat. Although these reports are not part of formal RIAs, they significantly inform policy because they receive considerable attention in cases when they suggest that it is very unlikely that the government will meet its own goals.
Since the enactment of the Climate Law, the Climate Council has produced a yearly report assessing whether current policies are sufficient to meet the emission goals set in the law. The council is independent from ministries and has its own secretariat. Although these reports are not part of formal RIAs, they significantly inform policy because they receive considerable attention in cases when they suggest that it is very unlikely that the government will meet its own goals.
To what extent do government ministries utilize ex post evaluations to improve existing policies?
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High-quality ex post evaluations serve as the basis for making adjustments to public policies.
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High-quality ex post evaluations frequently serve as the basis for making adjustments to public policies.
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High-quality ex post evaluations rarely serve as the basis for making adjustments to public policies.
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1
High-quality ex post evaluations are not utilized to make adjustments to public policies.
There are no legal requirements for ex post evaluations of public policies, although these evaluations occur through various formal and informal channels. For economic policies, the Economic Council regularly conducts evaluations, which are also performed in relation to medium-term planning and other policy work. These evaluations provide citizens with more information via media outlets and enable policy entrepreneurs to advocate for policy reforms. Think tanks such as the Economic Council of the Labor Movement (Arbejdsderbevægelsens Erhvervsråd), CEPOS (a liberal think tank) and Concito (a green think tank) also regularly comment on the ex post effects of policy initiatives as part of ongoing policy discussions. Many interest organizations have secretariats and regular publications that may include such evaluations. Recent examples show that explicit ex post evaluations, conducted by independent researchers, have been part of labor market interventions.
Expert committees are often appointed to analyze issues. Significant policies are regularly debated, and policy reforms are common. The preparation of the annual budget is one occasion for evaluating policies. The parliament’s Auditor General (Rigsrevision) also issues an annual report, which may lead to policy reforms. In some cases, an assessment is made an explicit part of a political agreement (e.g., labor market policy).
Expert committees are often appointed to analyze issues. Significant policies are regularly debated, and policy reforms are common. The preparation of the annual budget is one occasion for evaluating policies. The parliament’s Auditor General (Rigsrevision) also issues an annual report, which may lead to policy reforms. In some cases, an assessment is made an explicit part of a political agreement (e.g., labor market policy).