9780131830011

This book both introduces and explores thehowsandwhysof the practices of public policy. It providesreality-basedpractical advice about how to actually conduct policy analysis anddemonstratethe application of advanced analytic techniques.A five-part organization emphasizes that policy analysis is client-oriented and raises ethical issues; provides rationales for public policy describing the limitations to effective public policy and generic policy solutions; gives practical advice about implementing policy analysis; presents several examples illustrating how analysts have approached policy problems and the differences that their efforts have made; and summarizes the role and work of the analyst and challenges the analyst to both "do-well and do-good."For individuals interested in policy analysis and the analytical process.

List of Figures

xiii

List of Tables

xv

Preface

xvii

PART I: INTRODUCTION TO PUBLIC POLICY ANALYSIS

Preview: The Canadian Salmon Fishery

1

(22)

Increasing the Social Value of the Canadian Salmon Fishery

2

(20)

Postscript and Prologue

22

(1)

For Discussion

22

(1)

What Is Policy Analysis?

23

(16)

Policy Analysis and Related Professions

24

(7)

Policy Analysis as a Profession

31

(4)

A Closer Look at Analytical Functions

35

(2)

Basic Preparation for Policy Analysis

37

(1)

For Discussion

38

(1)

Toward Professional Ethics

39

(15)

Analytical Roles

40

(3)

Value Conflicts

43

(8)

Ethical Code or Ethos?

51

(2)

For Discussion

53

(1)

PART II: CONCEPTUAL FOUNDATIONS FOR PROBLEM ANALYSIS

Efficiency and the Idealized Competitive Model

54

(17)

The Efficiency Benchmark: The Competitive Economy

55

(2)

Market Efficiency: The Meaning of Social Surplus

57

(12)

Caveats: Models and Reality

69

(1)

Conclusion

70

(1)

For Discussion

70

(1)

Rationales for Public Policy: Market Failures

71

(42)

Public Goods

72

(19)

Externalities

91

(6)

Natural Monopoly

97

(7)

Information Asymmetry

104

(8)

Conclusion

112

(1)

For Discussion

112

(1)

Rationales for Public Policy: Other Limitations of the Competitive Framework

113

(19)

Thin Markets: Few Sellers or Few Buyers

114

(1)

The Source and Acceptability of Preferences

115

(4)

The Problem of Uncertainty

119

(5)

Intertemporal Allocation: Are Markets Myopic?

124

(4)

Adjustment Costs

128

(1)

Macroeconomic Dynamics

129

(1)

Conclusion

130

(1)

For Discussion

131

(1)

Rationales for Public Policy: Distributional and Other Goals

132

(24)

Social Welfare Beyond Pareto Efficiency

133

(9)

Substantive Values Other Than Efficiency

142

(5)

Some Cautions in Interpreting Distributional Consequences

147

(6)

Instrumental Values

153

(1)

Conclusion

154

(1)

For Discussion

155

(1)

Limits to Public Intervention: Government Failures

156

(36)

Problems Inherent in Direct Democracy

157

(6)

Problems Inherent in Representative Government

163

(16)

Problems Inherent in Bureaucratic Supply

179

(8)

Problems Inherent in Decentralization

187

(3)

Conclusion

190

(1)

For Discussion

191

(1)

Policy Problems as Market and Government Failure: The Madison Taxicab Policy Analysis Example

192

(17)

Regulation of the Madison Taxi Market

193

(11)

The Relationship between Market and Government Failures

204

(4)

Conclusion

208

(1)

For Discussion

208

(1)

PART III: CONCEPTUAL FOUNDATIONS FOR SOLUTION ANALYSIS

Correcting Market and Government Failure: Generic Policies

209

(52)

Freeing, Facilitating, and Simulating Markets

210

(8)

Using Subsidies and Taxes to Alter Incentives

218

(16)

Establishing Rules

234

(12)

Supplying Goods through Nonmarket Mechanisms

246

(7)

Providing Insurance and Cushions

253

(6)

Conclusion

259

(1)

For Discussion

260

(1)

Adoption and Implementation

261

(34)

The Adoption Phase

263

(11)

The Implementation Phase

274

(10)

Thinking More Strategically about Policy Design

284

(10)

Conclusion

294

(1)

For Discussion

294

(1)

Government Supply: Drawing Organizational Boundaries

295

(14)

Production Costs, Bargaining Costs, and Opportunism Costs

297

(5)

Predicting Bargaining and Opportunism Costs

302

(4)

Can Opportunism Be Controlled by the Use of Not-for-Profits?

306

(1)

Assessing and Building Capacity

307

(1)

Conclusion

307

(1)

For Discussion

308

(1)

PART IV: DOING POLICY ANALYSIS

Gathering Information for Policy Analysis

309

(15)

Document Research

310

(8)

Field Research

318

(3)

Putting Document Review and Field Research Together

321

(1)

Conclusion

322

(1)

For Discussion

323

(1)

Landing on Your Feet: How to Confront Policy Problems

324

(39)

Analyzing Yourself: Meta-Analysis

325

(1)

The Client Orientation

326

(1)

Steps in Rationalist Policy Analysis

327

(2)

Problem Analysis

329

(14)

Solution Analysis

343

(14)

Communicating Analysis

357

(4)

Meta-Analysis Once Again: Combining Linear and Nonlinear Approaches

361

(1)

Conclusion

362

(1)

For Discussion

362

(1)

Goals/Alternatives Matrices: Some Examples from CBO Studies

363

(17)

Setting Out Broad Options: Auctioning Radio Spectrum Licenses

364

(2)

Quantitative Predictions: Restructuring the Army

366

(4)

Comparing Proposed Alternatives: Launching Digital Television

370

(6)

Combining Policy Alternatives: Improving Water Allocation

376

(3)

Conclusion

379

(1)

For Discussion

379

(1)

Cost-Benefit Analysis

380

(46)

A Preview: Increasing Alcohol Taxes

381

(1)

Identifying Relevant Impacts

382

(2)

Monetizing Impacts

384

(15)

Discounting for Time and Risk

399

(11)

Choosing among Policies

410

(3)

An Illustration: Taxing Alcohol to Save Lives

413

(12)

Conclusion

425

(1)

For Discussion

425

(1)

PART V: CASE STUDIES OF POLICY ANALYSIS

Cost-Benefit Analysis in a Bureaucratic Setting: The Strategic Petroleum Reserve

426

(26)

Background: Energy Security and the SPR

427

(5)

Analytical Approaches to the Size Issue

432

(11)

The Role of Analysis in the SPR Size Controversy

443

(7)

Postscript

450

(1)

Conclusion

450

(1)

For Discussion

451

(1)

When Statistics Count: Revising the Lead Standard for Gasoline

452

(25)

Background: The EPA Lead Standards

453

(2)

Origins of the 1985 Standards

455

(1)

Pulling the Pieces Together

456

(4)

A Closer Look at the Link between Gasoline Lead and Blood Lead

460

(12)

Finalizing the Rule

472

(3)

Conclusion

475

(1)

For Discussion

476

(1)

PART VI: CONCLUSION

Doing Well and Doing Good

477

(2)

Name Index

479

(10)

Subject Index

489

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When we began our study of policy analysis at the Graduate School of Public Policy (now the Goldman School), University of California at Berkeley, the field was so new that we seemed always to be explaining to people just what it was that we were studying. It is no wonder, then, that there were no textbooks to provide us with the basics of policy analysis. More than a dozen years later we found ourselves teaching courses on policy analysis but still without what we considered to be a fully adequate text for an introductory course at the graduate level. Our experiences as students, practitioners, and teachers convinced us that an introductory text should have at least three major features. First, it should provide a strong conceptual foundation of the rationales for, and the limitations to, public policy. Second, it should give practical advice about how todopolicy analysis. Third, it should demonstrate the application of advanced analytical techniques rather than discuss them abstractly. We wrote this text to have these features.We organize the text into six parts. In Part I we begin with an example of a policy analysis and then emphasize that policy analysis, as a professional activity, is client-oriented, and we raise the ethical issues that flow from this orientation. In Part II we provide a comprehensive treatment of rationales for public policy (market failures, broadly defined) and we set out the limitations to effective public policy (government failures). In Part III we set out the conceptual foundations for solving public policy problems, including a catalogue of generic policy solutions that can provide starting points for crafting specific policy alternatives. We also offer advice on designing policies that will have good prospects for adoption and successful implementation and how to think about the choice between government production and contracting out. In Part IV we give practical advice about doing policy analysis: structuring problems and solutions, gathering information, and measuring costs and benefits. In Part V we present several extended examples illustrating how analysts have approached policy problems and the differences that their efforts have made. Part VI briefly concludes with advice about doing well and doing good.We aim our level of presentation at students who have had, or are concur rently taking, an introductory course in economics. Nevertheless, students 14thout a background in economics should find all of our general arguments and most of our technical points accessible. With a bit of assistance from an instructor, they should be able to understand the remaining technical points.We believe that this text has several potential uses. We envision its primary use as the basis of a one-semester introduction to policy analysis for students in graduate programs in public policy, public administration, and business. We believe that our emphasis on conceptual foundations also makes it attractive for courses in graduate programs in political science and economics. At the undergraduate level, we think our chapters on market failures, government failures, generic policies, and cost-benefit analysis are useful supplements, and perhaps even replacements, for the commonly used public finance texts that do not treat these topics as comprehensively.

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Policy Analysis : Concepts and Practice

Policy Analysis : Concepts and Practice

0131830015

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