Methods of Public Policy Analysis I & II
Political Science 532/533 is an integrated course sequence devoted to the analysis of public policy. The objective of this sequence is to train students in analytical methods that can be applied to a wide array of policy issues. We will study a variety of analytical tools¾ such as cost-benefit analysis, risk assessment, decision theory, game theory, linear programming, and applied statistical analysis¾ that can be brought to bear upon policy problems.
I view the fundamental task of policy analysis as mapping out all the areas of analysis that need to be performed to identify the consequences of different policy options and then evaluating those consequences within different normative frameworks. Such a task often requires analysis of behavioral changes of individuals affected by the policy (including policy makers and other institutional players); changes in the physical or natural world; long-term impacts upon institutions; uncertainty at many levels; the legal constraints and social norms affecting policy options; notions of fairness and justice; and a variety of other areas that will be relevant to the problem at hand.
Students should be prepared with a basic knowledge of microeconomics (Econ 280 or 380), political analysis (Poly Sci 200), mathematics (at least Math 110, though knowledge of calculus will be very helpful) and basic statistics (Poly Sci 328 or Econ 378). The course will contain a thorough review of the economic and statistical tools that will be used in the class, but students who are well-prepared in the above areas will be at an advantage. Please see me if you have questions regarding preparation.
Students who take 532 should plan on enrolling in 533 during Winter 1999. Also, those who plan on taking 533 in Winter and have taken 532 prior to the Fall 1997 should consult me as soon as possible. Students who have not had Poly Sci 328 or Econ 378 are STRONGLY encouraged to take either of these courses during Fall 1998. The material covered there will be very important for doing well in 533 during Winter Semester.
Over the course of a year we will do a lot of different things. You will each have strengths and weaknesses in terms of your preparation. You may not be mathematically inclined, you may struggle with statistics, you may not be the best reader in the class, you may have difficulty writing, your experience with important computer software (such as a spreadsheet) may be limited, and so forth. You need to focus on getting "up to speed" in the areas you are weak in. If you cant do algebra, hit the books and get some help; if you had statistics too long ago to remember much, spend some time reviewing.
This is a graduate-level course. This means, in a nutshell, that students are to become producers of knowledge, not merely consumers. Consequently, an important measuring stick for the course is how much I am learning from the students. The more Iand your fellow studentsare learning from you, the better I am doing my job as a teacher. You will be evaluated not only on what you know, but also on your ability to rigorously attack new problems and to share your answers with others.
Because this is a graduate course, I also expect much more from you than I do in an undergraduate course. You are expected to work harder in the areas where you are poorly prepared; the pace will be faster than other courses; and the workload will be greater. In general, I expect a much higher level of academic maturity from you than I would from juniors or seniors (even though a few of you may still be juniors and seniors).
Course Characteristics and Requirements:
* Each student will complete a major policy paper (approx. 30 pages). The final version of this paper will be due towards the end of Winter Semester, 1999. Grades for this paper will consist of fulfilling several interim assignments. They are listed below with grading weights and due dates.
Part I: Fall Semester
If you are still an undergraduate, I strongly encourage you to turn your Prospectus into a grant for a $1,000 ORCA scholarship. I will be happy to help you in this process.
* 25% of the grade in each semester will consist of course assignments. There will be three types of assignments:
One of the main reasons for paying so much attention to the term paper is because it is really your opportunity to shine. Ideally you will come out with a finished product that you can show people (like potential employers) with pride.
* Modern technology has given us numerous tools of policy analysis that students will be expected to be familiar with. These include the Internet and various types of computer software including statistical analysis packages and spreadsheets. You are doing a disservice to yourself, not to mention wasting the tremendous resources provided to you at BYU, by not learning how to use these tools. Using these tools will be a key component of several class assignments.
* Before jumping into the daily material, I like to begin each class with a little discussion to ease into the day and get our bearings. This will generally consist of the following items:
532: 25% Assignments; 50% Exams; 25% Policy Paper (Part I).
533: 25% Assignments; 50% Exams; 25% Policy Paper (Part II).
I reserve the right to give quizzes, but if students are coming prepared to class they will not be necessary. I welcome input about grading procedures, but please dont bug me by whining about grades.
There will be a midterm and final exam each semester. These mid-term will consist of an un-timed, closed-book portion in the testing center and an open-book, take-home portion. The final exam will consist of a take-home exam as well as a closed-book, in-class exam as scheduled by the university.
You should allow yourself 3 hours for the Testing Center Exam, although I anticipate it will only take you 1-2 hours to complete. Exam Dates are as follows:
532: Midterm Exam: Oct. 19-20 (Testing Center). Take-home portion due: Oct. 20 in class.
Final Exam: Thursday, Dec. 17. Take-home portion due at beginning of in-class portion.
533: Midterm: Feb. 23-24 (Testing Center). Take-home portion due: Feb. 23 in class.
Final Exam: As schedule by the University.
According to University Policy, Final Exams cannot be given early! Please do not ask for exceptions.
There are four required texts:
1. Edith Stokey and Richard Zeckhauser, A Primer for Policy Analysis. W.W Norton and Co., 1978.
2. Edward Zajac, Political Economy of Fairness. MIT Press, 1995.
3. David L. Weimer and Aidan R. Vining, Policy Analysis: Concepts and Practice,2nd Edition. Prentice Hall, 1992.
4. Fritz W. Scharpf, Games Real Actors Play:Actor-Centered Institutionalism in Policy Research. Westview, 1997.
Other readings not on the syllabus will be assigned periodically at the instructor's discretion.
Students are responsible for keeping up to date on reading and homework assignments during the semester. I will tell you in class when readings need to be completed. I will also give you updates via email as necessary. You should have completed the assigned readings in each section before we begin classroom lecture and discussion. If you need to miss class for an extended period of time (more than one day), please contact me beforehand.
We will proceed according to the following outline. We should make it through Section 9 in the Fall.
Assigned readings are indicated by the following abbreviations:
SZ: Stokey and Zeckhauser; Z: Zajac; SCH: Scharpf; WV: Weimer and Vining
Section 1: Perspectives on Policy Analysis
Abstract: We will briefly outline the components of the policy analysis methodology to be developed in the course with some limited attention to other potential methodologies. A particular focus is the complexity of policy research and how to make some sense out of it.
Readings: SCH: Ch. 1-2; SZ: Ch. 1; WV: Ch. 1
Section 2. The Rational Actor
Abstract: The primary unit of analysis is the individual. We will consider individual behavior in the context of rational choice theory. Basic utility optimization will be presented, where the point is to derive individual demand curves for market and non-market commodities. These demand curves and other consumer welfare measures will be used to reflect the value of changes in variables affected by public policy changes. The decision tree will also be introduced as an analytical device.
Readings: SZ: Ch. 8; SCH: Ch.3;
Section 3. Strategic Interactions in the Policy Sphere
Abstract: The various outcomes of policy changes are also influenced by the interaction that individuals have with each other. These interactions, including the interactions between people involved in the policy-making process, will be analyzed. The basics of game theory will be introduced.
Readings: SCH: Ch. 4-5
Section 4: Markets, Efficiency, and Market Failures
Abstract: One of the major ways that policy affects individuals is through changes in relative prices. We will discuss how prices are determined and how changes in price affect individual welfare. We will also discuss the efficiency properties of markets and how policy affects economic efficiency. A great deal of emphasis will be given as well to "market failures" and ways in which appropriate public policies may correct these failures.
Readings: Z: Ch. 2-5; SZ: Ch. 13-14; MV: Ch. 3-4
Section 5. Social Welfare and Justice
Abstract: The previous sections deal solely with impacts upon individuals, but policy analysis requires some method of aggregating individual impacts in a way that is both reasonable and consistent with social norms. We will discuss various notions of social welfare that extend beyond Pareto efficiency and discuss how different notions of fairness and justice will affect the appropriated choice of policy.
Readings: Z: Ch. 7-12; MV: Ch. 6.
Section 6. Public Choice
Abstract: Most of the intellectual tradition in both political science and economics ignores incentives faced by individuals involved in the policy process and how those incentives will affect policy outcomes. We will discuss the basics of public choice theory that has become a prominent mode of analysis in recent decades, and we will discuss how "government failure" often limits the ability to correct market failures.
Readings: Z: Ch. 13-14; MV: Ch. 6-7; SCH: Ch. 7
Section 7. Basics of Cost-Benefit Analysis
Abstract: A central component of the course is cost-benefit analysis, which is an attempt to link together the previous sections in the enterprise of comparing the costs and benefits of different policies and making choices. We ignore uncertainty, for the time being, and concentrate on how costs and benefits are revealed, estimated, and weighed in the policy making environment.
Readings: SZ: Ch. 9; MV: Ch. 9
Section 8. Policy Analysis with Uncertainty
Abstract: Uncertainty is introduced into the analysis. Uncertainty affects both individuals analysists are trying to study and, for several reasons, the analyst herself. We discuss utility maximization under uncertainty, the effect of uncertainty upon strategic interactions, and uncertainty in the analysis of policy. Uncertainty will be a major component of analysis performed from this point forward.
Readings: Z: Ch. 6
Section 9. Considering the Future
Abstract: Accounting for the future--particulary the welfare of future generations--is a central problem in policy analysis. We will discuss ways of modeling the future and the controversies surrounding discounting.
Readings: SZ: Ch. 10
Section 10. Probabilistic Decision Theory
Abstract: We develop more fully the decision making problem under uncertainty. The fundamental task is modelling options available to the policy analyst and accounting for the important variables and unknowns in the decision making process.
Readings: SZ: Ch. 12
Section 11. More on Game Theory and Policy Analysis
Abstract: Decision theory is essentially a game against nature. In this section we extend the same type of analysis used in section 10 to consider when some of the outcomes are determined by the actions of other individuals. We discuss the notion of Nash equilibrium and how game theory can be used in the policy analysis.
Readings: SCH: Ch. 6, 8-9
Section 12: Dynamic Models and Processes
Abstract: Linkages of important variables over time will be discussed and analyzed. Queuing theory, markov processes, and simulation techniques will be used and computer methods to solve dynamic problems will be implemented.
Readings: SZ: Ch. 4-7
Section 13: Linear and Non-linear Programming
Abstract: The theory and application of linear and non-linear programs will be presented. Emphasis will be on translating policy problems into a programming framework and using simple tools found in Spreadsheet software to solve the programs.
Readings: SZ: Ch. 11
Section 14: A Review of Probability and Statistics
Abstract: We will rapidly review the basics of descriptive and inferential statistics and the practice of testing hypothesis with data and statistical models. We will also discuss problems in data collection and how they affect statistical inference.
Readings: To be assigned.
Section 15: Making Statistical Arguments
Abstract: Building on section 14, we will move into multiple regression analysis and discuss how to make important inferences in the context of a regression model. Emphasis will be placed on identifying what types of statisitical relationships are particularly releveant to different types of policy problems and how regression models can be used to incorporate data into policy analysis.
Readings: To be assigned.
Section 16: Cost-Benefit Analysis Revisited
Abstract: We will revisit cost-benefit analyis and augment the anlaysis with the tools we have learned subsequent to Section 7.
Readings: MV: 11-13
Section 17: Applications
Abstract: We will consider actual problems in public policy that incorporate all the tools developed so far in the course. Likely applications will include global environmental policy and health care policy.
Readings: To be assigned.