Policy Analysis

Opportunities and Challenges in Democratic Polities

By

Dr. David Weimer

Overview

What is policy analysis?

What do professional policy analysts contribute?

What roles can policy analysis play in democratic polities?

What is policy analysis?

Policy analysis as a professional activity is client-oriented advice relevant to public decisions and informed by social values.

Policy analysis has a simple framework – compare alternatives in terms of goals.

Goals/Alternatives matrices provide visual display of framework.

Goals/Alternatives Matrix

PV – prediction-valuation Alternatives

#1 #2 #3

Goals

Value A PV PV PV

Value B PV PV PV

Value C PV PV PV

Just Rational Decision Making!Alternatives

Honda

Civic

BMW

540i

Volvo

S40

Goals

Purchase Price

$12,400 $46,800 $22,700

Mileage 32/39 mpg

15/23 mpg

22/32 mpg

Style Good Excellent Poor

Safety Very Good

Very Good

Excellent

Status Low High Medium

Avoiding MistakesMake alternatives specific – model as well as make.Start with broad goals that cover relevant values – safety rather than side air bags.Predict and value each alternative in terms of all the goals.Expect tradeoffs!Have real alternatives – BMW really possible?

What Do Policy Analysts Contribute?

Filling cells of matrix: use social science and other skills to make predictions and valuationsAdding columns to matrix: design policy alternativesAdding rows to matrix: provide arguments for inclusion of goals reflecting full range of social values

Filling Cells: Applying Social Science Skills

Sophistication of prediction and valuation depends on available time, data, and skillsDraws on research methods: economic and mathematical modeling, statistics, program evaluation, case studiesDraws on research findings: relationships, parameters, elasticitiesGrows with disciplinary research (example: contingent valuation surveys)

Taiwan’s Fourth Nuclear Power Plant

Environmental impacts Life-cycle assessment from fuel to waste Comparison with alternatives

Economic impacts Projected electricity demands at various prices Reliability of power supply Identification of sunk costs

National security Vulnerability to blockade Vulnerability of facilities

Adding Columns:Designing Alternatives

Borrowing and tinkering

Institutional design: Creating rules and incentives to promote desirable outcomesMonitoring casino gambling in British

ColumbiaUsing simultaneous multi-round auctions to

allocate broadcast spectrum in U.S.

Modifying the Nuclear Power Plant Alternative

Reducing political oppositionCompensation for nearby residentsGreater investment in emergency responseMore participation by environmental groups

in planning processDealing with disposal issueContracting with foreign government Simultaneous investment in technology to

reduce storage risks during intermediate period

Adding Rows:Instrumental and Substantive Values

Instrumental values: Administrative feasibilityPolitical feasibility

Substantive values:Diffuse interestsSilent voices

Political Feasibility

Two extremes:Demand immediate political feasibility – only recommend those alternatives that are certain to be accepted politicallyIgnore immediate political feasibility – only recommend those alternative that are desirable in terms of substantive values

Case for Not Always Demanding Immediate Political Feasibility

Guano Theory May be cumulative effect over timeExample: U.S. airline deregulation

Limestone TheoryIdeas may reappear at unexpected

timesExample: Ronald Coase’s 1959

proposal for spectrum auctions

Substantive Values in Representative Governments

Monitoring representatives is costlyReturns to monitoring vary: Higher for concentrated rather then diffuse interests Higher for organized rather than unorganized interests

Electoral incentives favor: Concentrated over diffuse interests Organized over unorganized constituencies Hidden over visible costs Current over future benefits; future over current costs

Speaking for Diffuse Interests

Raising economic efficiency as a goal often corresponds to speaking for diffuse interestsTakes account of small gains accruing to

those participating in marketsDistinguishes between transfers and gains

from trade

Not always adequate – explicit attention to distribution needed

Speaking for Silent Losers

Some may not anticipate being losersThose who move to city with rent controls

Some may not know they are losersThose who lose jobs because of price

controls

Some may not yet be bornFuture generations who will live with the

consequences of long lasting policies

How Can the Benefits of Policy Analysis Be

Realized?Support some “politically neutral” analytical organizations

Induce supply of and demand for analysis

Promote professional norms for policy analysts

Analytical Organizations

Must have incentive to establish credibility: Legislature as client may work best

Start with narrow scopes where technical skills are relatively valuable

Emphasize prediction rather than recommendation

Examples: California Legislative Analyst’s Office; U.S. Congressional Budget Office

Expanding the Role of Analysis

Make analysis a routine requirement U.S.: environmental impact statements, regulatory

cost analysis ROC: Environmental Impact Assessment Act

Make analysis public and invite public participation Require analyses to be posted on Internet Allow interested parties to post comments

Promote Professional Norms

Increase graduate training in policy analysis Support Shih Hsin University’s efforts to

strengthen graduate training in policy analysis Encourage greater integration of policy analysis

into public administration curriculum Send more students to study in U.S. public policy

programs (Especially at the University of Wisconsin!)

Join international organizations for promoting policy analysis such as the Association for Public Policy Analysis and Management