Public Policy, Policy Analysis, And Cost-Benefit Analysis

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Public Policy, Policy Analysis, andCost-Benefit AnalysisYoshitsugu and Vining, Policy Analysis, 5th Edition, Longman, 2011.Ch. 2 What Is Policy Analysis?

Outline Whatis policy evaluation? What is policy analysis? Framework of policy analysis Communication of policy analysisresults2

QuestionsWhat is the relationship between policyanalysis in this course and policyevaluation in governments? What are the differences between policyanalysis and academic research in socialsciences? What are the roles of policy analysis? Basic steps in policy analysis? Methodologies used in policy analysis? 3

Types of policy evaluation/policy analysisJapanese TermAmericanTermWhenStarted?Unit ofFocusKey Question“ex is1930’s (Public Decisionworks)1970’s (regreview)What decisionshould ion1960’sProgramDoes management1990’sOperatingorganizationHow canprogram workbetter?Steven Kellman (Kennedy School of Government, Harvard), “Policy Evaluation: Tools to ImproveGovernment and/or to Shrink It ?” International Symposium on Policy Evaluation, 2006. sium result 4.pdf4

What is policy analysis? Policy Analysis Weimer & Vining: Terminology used in the USAIncludes policy evaluation/assessmentAnalysis and evaluation of policy alternatives beforethe choice of a policyPolicy analysis is client-oriented advice relevant topublic decisions and informed by social values. (WV,Chapter 2)Professional ethics for policy analysts Responsibility to the client and analytical integrity (WV,Chapter 3)5

Steps of policy analysisWeimer and Vining 20106

Basic components of policy analysis Understand the problems and construct a frameworkfor analysis Formulate policy alternatives to evaluate This step usually requires most resourcesUse natural sciences, medical sciences, engineering, etc.depending on the policy areaEvaluate the benefits and costs of policy impacts Example: Rail transit vs. Highway networkForecast impacts of each alternatives Example: Urban transportation problems: Rapidurbanization, Traffic congestion, Environmental problemsMarket failure and government failureCost-Benefit Analysis: Evaluation in monetary unitsCost-Effectiveness Analysis, Qualitative CBAEvaluate the reliability of the evaluation results(Sensitivity analysis)7

Basic steps of CBA (BGVW Ch.1) Step 1 – Specify the set of alternative projects.Step 2 -- Decide whose benefits and costs count (standing).Step 3 – Identify the Impact Categories, Catalogue them andselect the measurement indicators.Step 4 -- Predict the impacts quantitatively over the life of theproject.Step 5 -- Monetize (attach dollar values to) all impacts.Step 6 -- Discount benefits and costs to obtain present valuesStep 7 -- Compute the net present value of each alternative.Step 8 -- Perform sensitivity analysis.Step 9 -- Make a recommendation.

Policy Analysis Examples: GRIPS and GraSPPStudents Applicable policy areas are diverse Infrastructure investmentRegulatory impact analysis (assessment) Three Gorges Dam in Hubei, China: A Cost and Benefit Analysis; Cost and Benefit Analysis of CarPlate Controlling Policy:Shanghai Auction vs. Beijing Lottery; Banning Handguns in the United States2012 Student CBA Studies (GraSPP) GRIPS: Korean carbon tax policyGraSPP: Establishment of URS Campus in Jalajala, Rizal, Philippines; Implementing a Zero-Fare Policy for theSao Paulo Metro; Southern Expressway in Sri Lanka; UPass Program in British Columbia2013 Student CBA Studies (GraSPP) GraSPP: Restarting Japan’s Nuclear Power Plants: A Cost – Benefit Analysis; San Francisco – Mocoa(Colombia) Alternate Road; Mitigating Japanese Cedar Pollinosis: A Pigouvian Tax Proposal; Cost-BenefitAnalysis of a Sea Ambulance Project in the Municipality of Alabat in Quezon Province, Philippines2014 Student CBA Studies Taxes, government expenditures, social security, welfare policy2015 Student CBA Studies Social regulation: Health, safety, environmentEconomic regulation: Price, entry, quality, disclosureIntroducing U-Health in Korea for Aging Population; California High-Speed Rail; Tokyo SkytreeConverting Village Health Stations to Birthing Homes; CHENNAI METRO2011 Student CBA Studies (GraSPP) Deep-sea mining of methane hydrate located around Japan’s EEZ; Micro–Hydropower Plant in Nepal;Melamchi Water Supply Project; Building a Village-run Vegetable Processing Factory in Shanghai

Conditions for good policy analysis your answer, the recommendation you make to aclient, rarely by itself determines the quality ofyour analysis. Good analysis askes the rightquestions and creatively, but logically, answersthem. (Weimer and Vining 1999, p. 254)In policy analysis, however, it is more effective tohighlight ambiguities than to suppress them.(Weimer and Vining 1999, p. 255)Your task as an analyst is to reformulateexpressions of symptoms and statements ofpolicy alternatives into coherent analyticalframeworks. (Weimer and Vining 1999, p. 255)10

Policy analysis and social science researchAcademic Social ScienceResearchPolicy AnalysisMajorobjectiveConstruct theories forunderstanding societySystematic comparison andevaluation of alternatives availableto public actors for solving socialproblems"Client""Truth" as defined by thedisciplines, other scholarsSpecific person or institution asdecision makerCommonstyleRigorous methods forconstructing and testing theories,usually retrospectiveSynthesis of existing research andtheory to predict the consequencesof alternative policiesTimeconstraintsRarely external time constraintsStrong deadline pressure -completion of analysis usually tied tospecific decisionGeneralWeaknessOften irrelevant to informationneeds of decision makersMyopia resulting from clientorientation and time pressureExcerpt from D.L. Weimer and A.R. Vining, Policy Analysis, Prentice Hall, 2010, Table 2.1, p.26.11

Role of economics in policy analysis Economics (economic activities) is an importantaspect of policy impactsEconomics (Cost-benefit analysis) provides aframework of integrating non-economic (social,environmental, etc.) factors with economic factors Especially effective in risk evaluation to avoid informationalcascades:Sunstein, C.R., Risk and Reason - Safety, Law, and the Environment,Cambridge University Press, 2002. “economics is both a component of sustainable developmentand that economic analysis provides a framework for bringingthe other dimensions (social, environmental) together for thepurposes of decision making.”Assessing the impacts of spatial interventions: The ‘3Rs’ guidance(Department for Communities and Local Government, UK)12

Cost-benefit analysis in practicecost-benefit analysis seems thoroughlyentrenched in the federal bureaucracy.(p.5, Adler and Posner, 2000.) “if government agencies should employcost-benefit analysis, then they should doso because it is a beneficial tool, notbecause the sum-of-compensatingvariations test or any related test has basicmoral weight.” (Adler and Posner 2000,p.2)

Communication of policy analysis Structure of communication Periodical reports Gaps to be filled must be made clearClear analysis Clear and unambiguous explanationMaintain the attention of the client The client is busyNeed to be timelyExecutive Summary and Table of Contents are necessaryPresent the recommendation firstPresent the most important elements in analysisHeadlines Market failure A smoker bears only a part of the social costs of smokingDo not rely too much on bullets and highlightsDo not rely too much on figures, graphs, and tablesExplanations must concentrate on the logic of analysisCrisp sentencesWeimer and Vining 1999 Chapter 1014

Weimer and Vining 2010 Chapter 1515

Cost-benefit analysis in practice cost-benefit analysis seems thoroughly entrenched in the federal bureaucracy. (p.5, Adler and Posner, 2000.) “if government agencies should employ cost-benefit analysis, then they should do so because it is a beneficial tool, not because the sum-of-compensating-variations test or any related test has basicFile Size: 383KB

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