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Ethics and Values

Ethics and Values. in Public Policy. How Should We Decide?. Utilitarianism, deontology, casuistry Market, politics, authority. Making Public Policy. How should we decide how to decide what our policies should be? We can let people choose for themselves (markets)

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Ethics and Values

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  1. Ethics and Values in Public Policy

  2. How Should We Decide? • Utilitarianism, deontology, casuistry • Market, politics,authority Mark Carl Rom

  3. Making Public Policy • How should we decide how to decide what our policies should be? • We can let people choose for themselves (markets) • We can have the public choose for everyone (democracy) • We can have leaders decide for everyone (authority) Mark Carl Rom

  4. Which is Better? • When should we use • Markets? • Democracy? • Authority? • All have advantages/disadvantages • No one form dominates the others Mark Carl Rom

  5. Steps in Policy Choice • Step 1: Is there a problem? What is it? • Step 1A: If “No” • No explicit policy • Citizens may choose whatever actions they like, subject to existing policies • Example: Marriage? Child bearing? Child rearing? • Step 1B: If “Yes”, then go to Step 2 Mark Carl Rom

  6. Steps in Policy Choice • Step 2: Should we decide collectively or individually? • Policy choice: This is a individual decision problem; go to Step 1A (leave it to individual choice) • Policy choice: This is a collective decision problem; go to Step 3 Mark Carl Rom

  7. Steps in Policy Choice • Step 3: How should we choose the policy? • Step 3A: Policy selected through democratic choice (voting). • Step 3B: Policy delegated to authorities (who might be experts). Mark Carl Rom

  8. Types of Decisions • Two main questions: • Does the outcome of the decision affect only my welfare, or the welfare of others? • Private outcomes: my welfare only • Public outcomes: others’ welfare • Is the decision made me alone, or by the group as a whole? • Individual decisions: made individually • Collective decisions: made by the group Mark Carl Rom

  9. Individual Decision Collective Decision Private Outcome Liberty of the individual! Consequence: individual satisfaction. Leave it to the market! Tyranny of the majority: Consequence: theft of rights! Politics may hurt the public! Public Outcome Tyranny of the minority: Consequence: Few positive externalities; many negative ones. The market may hurt the public! Liberty of the group! Consequence: social welfare. Leave it to the politics! Types of Policy Decisions Mark Carl Rom

  10. Collective Decisions • What kind of issues should trigger collective decisions? • What kind of issues should trigger individual decisions? • Hard cases… • What decisions truly only affect the individuals who make them? • What decisions truly affect the public? Mark Carl Rom

  11. Private-Public Decisions • What actions should trigger collective decisions? If individual decisions cause: • Material harms • Elevated risk of harm • Amenity harms • Emotional or psychological harms • Spiritual or moral harms Mark Carl Rom

  12. Public-Private Decisions • What actions should trigger collective decisions? If individual decisions cause: • Structural harms (damage to organizations or communities) • Accumulative harms (actions that damage only if enough people do them) • Harms to a community or society if individuals fail to take action • So….what actions do NOT affect others? Mark Carl Rom

  13. The Three Conflicts Markets Equity Efficiency Politics Experts Institutional Reform Mark Carl Rom

  14. How do experts decide? • Professional training: Typically focuses on • Efficiency (economists) • Equity (political scientists) • Rights (lawyers) • “Expert failure” • Cognitive limits • Cognitive impairments • Uncertainty • Value conflicts • Preferences • Power Mark Carl Rom

  15. How do politics decide? • Goal: To learn the “Will of the People” • Process: Voting • Plurality • Majority • Unanimity • Proportional representation • Borda counting • Approval counting • Optimal majority rule • Different procedures will lead to different outcomes Mark Carl Rom

  16. Criteria for “Good” Voting Systems • http://en.wikipedia.org/wiki/Voting_system • But…no voting rule satisfies all criteria! Mark Carl Rom

  17. Who Should Win? Better C B A 6 A C B 8 B C A 7 Number of Voters in Group Mark Carl Rom

  18. Policy: The Federalism ‘Game’ Mark Carl Rom

  19. How do Markets Decide? • Markets: a set of institutions for reducing transaction costs in exchange of goods and services • Preconditions: diverse preferences, diverse endowments, economies of scale, specialization • Benefits: gains from trade, gains in productive efficiency, prices convey information Mark Carl Rom

  20. Markets are efficient • Under perfect competition (PC) • Perfect and free information • Price taking • Private decisions • Private goods • Market failures: when PC does not exist, experts MAY improve efficiency Mark Carl Rom

  21. Market Failure • Three main types of market failures • 1. Markets fail if governments remove, or fail to create, the ´infrastructure´ of market processes • Property rights, legal system • 2. Markets fail if governments create, or fail to remove, impediments to market processes • Taxes, subsidies • 3. Markets fail to perform efficiently because of inherent violations of the goal of Pareto optimality • Informational asymmetries, externalities, economies of scale Mark Carl Rom

  22. Markets v. Politics • The contest between efficiency and equity • There is (no) agreement about what is efficient means • There is no agreement about what is equitable • Equal shares (Rawls) • Equal needs (Marx) • Equal contributions (Smith) • Equity and efficiency: conflict or compatible • Tradeoffs? • More of both? Mark Carl Rom

  23. Politics vs. Markets • Do markets or politics best ensures legitimate rewards to individual effort, consistent with preserving rights of others? • Markets handle allocation efficiently • Politics in a democracy will be redirected towards redistribution • Experts do not agree about what to do Mark Carl Rom

  24. Experts v. Politics • Preferences x Institutions = Outcomes • If preferences change, and institutions remain constant, outcomes will change • If institutions change, and preferences remain constant, outcomes will change • Political actors focus on outcomes, and seek to manipulate either preferences or institutions • Experts do not agree what outcomes, or institutions, are preferable Mark Carl Rom

  25. Tensions • Markets and Politics • Equity Policies • Income (re)distribution • Resource allocation • Externality control • Theory: Individual vs. collective decisions. • Practice: Who actually has power in markets and politics? Mark Carl Rom

  26. Tensions • Markets and Experts • Efficiency Policies • Market structure • Externality control • Public goods • Information asymmetry • Theory: Potential for enhancing efficiency • Practice: What are real motives and insights of both? Mark Carl Rom

  27. Tensions • Politics and Experts • Institutional Reform Policies • Institutional design • Values (equity and efficiency) • Information • Theory: Both work for “public interest” • Practice: Politicians reluctant, experts ignorant Mark Carl Rom

  28. How Should We Decide? • Utilitarianism, deontology, casuistry • Market, politics, experts Mark Carl Rom

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