Policy Analysis

1. Policy Analysis Opportunities and Challenges in Democratic Polities By Dr. David Weimer

2. Overview • What is policy analysis? • What do professional policy analysts contribute? • What roles can policy analysis play in democratic polities?

3. 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.

4. Goals/Alternatives Matrix

5. Just Rational Decision Making!

6. Avoiding Mistakes • Make 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?

7. What Do Policy Analysts Contribute? • Filling cells of matrix: use social science and other skills to make predictions and valuations • Adding columns to matrix: design policy alternatives • Adding rows to matrix: provide arguments for inclusion of goals reflecting full range of social values

8. Filling Cells:Applying Social Science Skills • Sophistication of prediction and valuation depends on available time, data, and skills • Draws on research methods: economic and mathematical modeling, statistics, program evaluation, case studies • Draws on research findings: relationships, parameters, elasticities • Grows with disciplinary research (example: contingent valuation surveys)

9. 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

10. Adding Columns:Designing Alternatives • Borrowing and tinkering • Institutional design: Creating rules and incentives to promote desirable outcomes • Monitoring casino gambling in British Columbia • Using simultaneous multi-round auctions to allocate broadcast spectrum in U.S.

11. Modifying the Nuclear Power Plant Alternative • Reducing political opposition • Compensation for nearby residents • Greater investment in emergency response • More participation by environmental groups in planning process • Dealing with disposal issue • Contracting with foreign government • Simultaneous investment in technology to reduce storage risks during intermediate period

12. Adding Rows:Instrumental and Substantive Values • Instrumental values: • Administrative feasibility • Political feasibility • Substantive values: • Diffuse interests • Silent voices

13. Political Feasibility Two extremes: • Demand immediate political feasibility – only recommend those alternatives that are certain to be accepted politically • Ignore immediate political feasibility – only recommend those alternative that are desirable in terms of substantive values

14. Case for Not Always Demanding Immediate Political Feasibility • Guano Theory • May be cumulative effect over time • Example: U.S. airline deregulation • Limestone Theory • Ideas may reappear at unexpected times • Example: Ronald Coase’s 1959 proposal for spectrum auctions

15. Substantive Values in Representative Governments • Monitoring representatives is costly • Returns 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

16. Speaking for Diffuse Interests • Raising economic efficiency as a goal often corresponds to speaking for diffuse interests • Takes account of small gains accruing to those participating in markets • Distinguishes between transfers and gains from trade • Not always adequate – explicit attention to distribution needed

17. Speaking for Silent Losers • Some may not anticipate being losers • Those who move to city with rent controls • Some may not know they are losers • Those who lose jobs because of price controls • Some may not yet be born • Future generations who will live with the consequences of long lasting policies

18. 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

19. 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

20. 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

21. 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