Question: Public Policy: Explain how a greater appreciation of the various decision-making models routinely employed.......

23 Mar 2023,5:53 AM

 

L06 Overview

In this lesson we will examine the nature of policy making through the lens of decision making, the determination of costs and benefits, how those determinations are filtered through decision approaches, and how those translate (or not) into ethical considerations and implications for public policy.

At the end of this lesson, you will be able to:

• Explain how a greater appreciation of the various decision-making models routinely employed throughout the policy process can lead to a better understanding and definition of policy problems and the subsequent development of more effective policy solutions.
• Explain the basic principles underlying a cost-benefit analysis.
• Explain why cost-benefit analysis has sometimes been referred to as “nonsense on stilts" (Peters, 2016, p. 464).
• Explain why it is important for citizens and policy-makers to ensure that ethical considerations are a key component of any policy evaluation.

L06 Decision-Making Models

Types of Decision-Making Models

Rational Model

Rational decision-making models assume perfect knowledge. Additionally, these models assume that policy actors will choose policy alternatives that produce the greatest level of benefits given the costs as opposed to simply formulating a solution that works. In other words, rational models assume that policy actors are always attempting to maximize social gain. The stages heuristic model of the policy process, which is an integral component of this course, is an excellent example of a rational decision-making model. The basic assumption underlying all rational decision-making models is that policy actors have the ability to adequately evaluate all possible courses of action and to effectively distinguish between those alternatives that provide the greatest level of benefits and those that do not.

“To select a rational policy, policymakers must (1) know all the society’s value preferences and their relative weights, (2) know all the policy alternatives available, (3) know all the consequences of each policy alternative, (4) calculate the ratio of benefits to costs for each policy alternative, and (5) select the most efficient policy alternative. This rationality assumes that the value preferences of society as a whole can be known and weighted (Dye, 2004, p. 15).” Once again, these assumptions assume perfect knowledge, which is why the rational model is more of paradigm to aspire to as opposed to one that can actually be employed in any realistic manner. However, the importance of rational decision-making models is that they can assist the policy-maker with identifying the barriers and limitations that inhibit good decision-making while concurrently helping to illuminate the inherent shortcomings of any policy decision.

The Stages-Heuristic (Policy Cycle)

The Stages-Heuristic or policy cycle approach conceptualizes the policy process as an interrelated series of stages. The strength of the framework is that it provides a basis within which to gain an overall understanding of the policy process as a fluid cycle of stage involving a variety of dynamics, institutions, and actors.

The actual policy process does not operate in a perfect set of step-by-step stages, however, this approach provides direction, clarity, and structure to better understand what would otherwise be a jumbled maze of policy evolution.

 

Incremental Model

In his seminal article concerning the evolution of public policy, Lindblom (1959), states that policy-making tends to be limited and more often than not a continuation or modification of previous and existing policies. These marginal or incremental changes are a direct result of the constraints placed on policy actors such as limited time, money, and information to include a lack of awareness or a complete understanding of the full range of policy alternatives and their associated consequences.

As discussed in Lesson 3, the inability to adequately circumscribe and define most social problems is a critical shortcoming of the policy process and to some extent can be partially mitigated through the implementation of limited policy changes as opposed to sweeping and radical reforms. Additionally, as we have discussed, there are extreme difficulties encountered with accurately identifying the target population. Consequently, incremental changes reflect the political necessity for compromise in our pluralistic democracy. These minor changes acknowledge the fact that existing policies represent government investment (sunk costs) such as the establishment of agencies, the hiring of employees, the construction of buildings, or the commitment to provide benefits to eligible recipients, or restrict certain types of behavior. Unlike incremental change, comprehensive policy change can often represent the loss of millions of tax dollars that have already been obligated to specific policy alternatives.

Finally, incremental policy modifications represent what Herbert Simon has referred to as the limits of rationality, bounded rationality, and satisficing (1976). Essentially, these three concepts define the overall cognitive limitations imposed on decision-makers by the human experience. Incremental decision-making models allow policy actors to do something, to act in a manner that is reasonably acceptable to variety of interests while not being so dramatic as to cause irreparable harm. Incremental decisions enable policy actors to conduct subsequent policy evaluation and to engage in a course of continuous incremental policy adjustment and debate whereby all stakeholders can claim some level of initiative and victory.

Incremental Approach

Incremental Approach: This approach suggest that the policy process operates within an inefficient political and institutional environment where policy decisions naturally favor minimal over dramatic policy change.

• “Usually - though not always - what is feasible politically is policy only incrementally, or marginally, different from existing policies.”
• “...A preoccupation with no more than incremental or marginal changes in policy often serves for still other reasons to raise the level of competence of policy.”
• Such a strategy concentrates the policy maker’s analysis on a familiar experience; sharply reduces the number of different alternative policies to be explored; and sharply reduces the number and complexity of factors he has to analyze.
• "Satisficing" a direct challenge to rational decision making because “an exhaustive search for the maximum, for the best of all possible policies, is not usually worth what it costs, and may in fact be impossible...One “satisfices” instead of maximizes.”

Group Model

In Federalist #10, Madison, recognizes that political faction can bring to bear both good and evil pressure on the political apparatus of a republic. In so doing, he acknowledges the existence of diverse political interests and emphasizes how these diverse interests can be an appropriate check and balance on political power at all levels of government, but he also indicated that the power of faction must also itself be checked. As such, group decision-making models or group theory encapsulate all politics and important political activity as being the resultant of group interaction and opposition. Dye states that groups become “the essential bridge between the individual and the government. Politics is really the struggle among groups to influence public policy. The task of the political system is to manage group conflict by (1) establishing rule of the game in the group struggle, (2) arranging compromises and balancing interests, (3) enacting compromises in the form of public policy, and (4) enforcing these compromises (2005, p. 20).” Theodoulou and Kofinis (2004) support this position by emphasizing the political reality of bounded rationality and incremental decision-making policy procedures, as outlined above, by indicating that for good or bad public policy normally represents the policy solution that received the most support which is also why Lesson 4 highlighted the concept of political feasibility as the key to policy adoption.

Elite Model

Dye succinctly summarizes the basic concepts of elite theory as follows:

• Society is divided into the few who have power and the many who do not. Only a small number of persons allocate values for society; the masses do not decide public policy.
• The few who govern are not typical of the masses who are governed. Elites are drawn disproportionately from the upper socioeconomic strata of society.
• The movement of non-elites to elite positions must be slow and continuous to maintain stability and avoid revolution. Only non-elites who have accepted the basic elite consensus can be admitted to governing circles.
• Elites share consensus in behalf of the basic values of the social system and the preservation of the system. In America, the bases of elite consensus are the sanctity of private property, limited government, and individual liberty.
• Public policy does not reflect the demands of masses but rather the prevailing values of the elite. Changes in public policy will be incremental rather than revolutionary
• Active elites are subject to relatively little direct influence from apathetic masses. Elites influence masses more than masses influence elites (Dye, 2004, p. 22).

The elite model underscores a general consensus focusing on a basic sense of conservatism that ultimately strives to maintain the status quo thereby preserving the policy-making process. The elite model also supports the basic tenets of the incremental model in that elites endorse marginal policy modifications to placate the masses while simultaneously protecting the basic political system and the elite position within that political system.

Elite theory does not necessarily imply elite hostility toward the masses or a shared consensus among elite members concerning all potential policy alternatives. However, elite theory does imply that policy decisions supported by elites reflect their own values, interests, and preferences as opposed to those of the majority. When elite preferences do conflict with one another they tend to be along a very narrow range of policy alternatives, and they do tend to achieve policy concurrence far more often than not.

Sub-Governments

In addition to institutional actors, public policy-making and evaluation is strongly influenced by a whole host of non-institutional actors such as; interest groups, lobbyists, think tanks, the media, and the public. These organizations operate in what are frequently called policy arenas, “iron triangles, policy issue networks, advocacy coalitions, “whirlpools,” policy subsystems, and of course sub-governments, which are all terms that attempt to describe the pluralistic nature, relative influence, and the fluid relationships that exist between institutional and non-institutional actors as they attempt to manipulate the policy process in reference to a specific policy issue. The significance of this ambiguous concept is that it helps to expand our understanding of the sphere of American policy-making to that beyond the halls of the three formal branches of government to also include an abundance of competing interests.

Bureaucratic Corporatist Model

Graham Allison views this perspective as one whereby government decision-making is the resultant of negotiation and compromise along regularized channels between many policy actors who are positioned hierarchically within the government engaging in what are essentially bargaining games. Allison refers to this behavior as the “Bureaucratic Politics” model and he indicates that there is no unitary actor but instead many actors, such as individuals, government agencies, and interest groups who constantly position themselves to exert influence on many diverse intra-national problems instead of focusing on just one single strategic issue. Consequently, decision-making is not the outcome of rational choice and careful consideration but rather as a result of the constant logrolling and give-and-take system that is politics (1969).

Institutional Model

“An institution is a set of regularized patterns of human behavior that persist over time. It is their differing sets of behavior patterns that really distinguish courts from legislatures, from administrative agencies, and so on. These regularized patterns of behavior, which we often call rules or structures, and the like, can affect decision-making and the content of public policy. Rules and structural arrangements are usually not neutral in their impact; rather, they tend to favor some interests in society over others and some policy results over others. For example, it is contended that some of the rules (and traditions, which often have the effect of rules) of the Senate, such as those relating to unlimited debate and action by unanimous consent, favor the interests of minorities over majorities (Anderson, 1990, p. 31).”

Systems Model

“Public policy may be viewed as a political system’s response to demands arising from its environment. The political system…comprises those identifiable and interrelated institutions and activities (what we usually think of as governmental institutions and political processes) in a society that make authoritative allocations of values (decisions) that are binding on society. The environment consists of all those phenomena – the social system, the economic system, the biological setting – that are external to the boundaries of the political system

Inputs into the political system from the environment consist of demands and supports. Demands are the claims for action made by individuals and groups to satisfy their interests and values. Support is rendered when groups and individuals abide by election results, pay taxes, obey laws, and otherwise accept the decisions and actions taken by the political system in response to demands.

Outputs of the political system include laws, rules, judicial decisions, and the like…The concept of feedback indicates that public policies (or outputs) made at a given time may subsequently alter the environment and the demands arising there from, as well as the character of the political system itself (Anderson, 1990, pp. 26-26).”

L06 Cost-Benefit Analysis

One of the most common decision-making tools employed by policy actors as they attempt to evaluate the advantages and disadvantages of competing policy alternatives is the cost-benefit analysis. The cost-benefit analysis represents an attempt to incorporate rational decision-making methods into a policy process that can be characterized as being chronically short of information, resources, time, and as having an overabundance of competing stakeholders and their values attempting to influence the resulting policy decisions in such a manner as to benefit their parochial interests. Simply stated, a cost-benefit analysis is the comparison of the costs associated with a policy or program to the benefits generated by that policy. The outcome of this comparison should clearly identify the policy alternative that produces societal benefits that are greater than the cost of other alternatives. If multiple alternatives produce benefits that exceed the cost, and if all such projects cannot be undertaken due to limited resources, then it is assumed that the policy alternative that produces the greatest level of benefits for society would be selected.

The overarching principles that form the framework of a cost-benefit analysis are simple. However a close examination of the details of each of these basic concepts reveals that each of the following steps incorporates some very basic assumptions. It is important that these assumptions be recognized and adequately understood for what they are otherwise they can render the resulting prioritization of alternatives useless at best and perhaps even harmful to society when policy alternatives dealing with social policy are involved.

Basic Concepts of Cost-Benefit Analysis

• Determining Costs and Benefits
• Assigning Value
• Discounting
• Choosing Among Alternatives

(Peters, 2016)

 

 

L06 Cost-Benefit Anaylsis: Determining Costs and Benefits

The most obvious and important step of a cost-benefit analysis is the identification and enumeration of all of the costs and benefits inherent in each proposed policy alternative. What makes this apparently simply process extremely difficult is the fact that virtually all public projects, including those that appear simple such as the construction of a building, are replete with social and intangible costs, that necessitate the use of basic assumptions. For example, is the degradation of the view of a mountain skyline an appropriate cost that should be attributed to a policy proposal to construct a windmill farm on the top of a mountain range? Of course the most the glaring assumption of all is the frequent belief that the established list of identified costs and benefits includes all potential possibilities of each. Simon’s concept of bounded rationality underscores the fallacy of this point by stating that despite our best cognitive efforts we cannot foresee all potential events, good or bad. Additionally, the lack of time, expertise, resources, and often political pressure coupled with the limitations of our own social construct prevent the adequate exploration of all potential costs and benefits. Consequently, it is impossible, especially when developing social policy such as unemployment, welfare, heath care, education, crime, environmental policy, and so on, to circumscribe with one hundred percent certainty all costs and benefits of each policy alternative. Therefore, it is possible that the presumptive best policy alternative may in fact turn out to be a total disaster. Unfortunately this is why many policy actors frequently utilize the cost-benefit analysis process as an attempt to deflect future criticism if the selected policy produces unplanned and undesirable outcomes. Policy actors can claim that “scientific methods” were used to determine the best policy alternative.

Types of Policy Evaluation

• Cost-Benefit Analysis: a method with which to evaluate and assess the effectiveness of a policy's costs, benefits, and outcomes.
• For certain types of programs, such as education or the environment, one could argue that the real benefits do not materialize for years or decades.

L06 Cost Benefit Analysis: Assigning Value

Once all of the costs and benefits for each policy alternative have been identified the next step in the process is to determine a measure of comparison that will be assigned to each cost and benefit. Normally a monetary figure is used such as a dollar value which is used to convert each perceived cost and benefit into a single economic dimension to facilitate the comparison of alternatives. The monetary value of many variables can be readily determined from known costs. For example, the cost of construction materials is widely known and predominantly dictated by market competition. However, for other variables such as the cost or benefit of a human life, or the cost or benefit of protecting an endangered species or environment, or the cost or benefit of improved health are not readily available from simple market competition. In many of these cases surrogate metrics are used. For example, when attempting to determine the cost or benefit of a human life an estimate of the average earnings projected over a 60 year life-span of a college educated person could be used. Of course the important question that immediately comes to mind is this, is the surrogate a true estimate of the original variable. While a dollar value of lifetime earnings may be calculated with a reasonable degree of accuracy many other factors that comprise the true cost or benefit of a human life would not be included in this estimate such as the enormous emotional, education, and social benefit that a given life of a person may have been able to bestow on society. Once again, social construct theory helps us to understand how our socially contrived definitions which are intended to help us to understand the events we experience in the world around us frequently blind us to a greater reality. In other words we begin to believe the metric as if it was irrefutably true. A classic example of this issue can be found in the case of the 1972 Ford Motor Company’s cost-benefit analysis to determine if they should fix a serious problem with their 1972 Ford Pinto that was prone to exploding after being struck from the rear. Ford determined that it would cost significantly less to pay the damages from wrongful death lawsuits then it would cost to fix the problem with the car. Consequently, many people would die a horrible death as a result of that decision.

In addition to the difficulty of assigning monetary values to many intangible social variables as briefly discussed above, it is impossible to assign monetary values to costs or benefits that were either unknown or ignored. This situation is an extension of the first basic concept discussed in the previous section. So when evaluators attempt to prioritize the analyses of the various policy alternatives based on the relative cost to benefit ratio it is frequently forgotten that these values may be totally unrepresentative of what the ultimate outcome of each policy may be. The point being that cost-benefit analysis is a useful tool but it should be one of many tools used to conduct as thorough analysis of policy alternatives. Several analytical techniques enable the policy actor to triangulate the best alternative from a variety of perspectives. This is why many research projects use both quantitative and qualitative analysis so as to capture the most accurate picture possible of potential policy outcomes.

 

 

L06 Cost Benefit Analysis: Discounting

“Discounting is a means of reducing all costs and benefits of a project to present value, based on the assumption that benefits created in the future are worth less than those created immediately (Peters, 2016, p. 460).” Two key aspects of discounting are the concepts of present and expected value.

Present Value

Is the value of a future good or service in today’s dollars. For example, how much money would you expect to receive a year from now in return for lending $100 today? If you would say that your $100 will actually be worth $110 a year from now then we are saying that the value of receiving $110 a year from now is equivalent to receiving $100 today. In other words the present of $110 a year from now is $100. “We can think of [$100] as the future payment discounted back to the present. Discounting is the standard technique for making costs and benefits accruing at different times commensurate (Weimer and Vining, 1992, p. 276).”

Expected Value

Just as it is impossible to identify all potential costs and benefits for each evaluated policy alternative it is equally impossible to predict with absolute certainty what the future value of those enumerated costs and benefits will be. Consequently, a common technique is to assign a probability value to each cost and benefit and then to multiply that probability value by the expected present value figure. For example, if the construction of a dam is expected to produce a net benefit of $25 million, present value, if at least one major flood occurs in the next 20 years, or if no flood occurs then the benefit (cost) will actually be a -$5 million. In this case, multiple the probabilities of each occurrence by the present value cost. Let’s say that the historical probability of at least one major flood is 33 percent and no flood is 67 percent. The expected value of present net benefits would be calculated as follows: (.33)($25 million) + (.67)(-$5 million) = ($8.25 million) + (-$3.35 million) = $4.9 million (Weimer and Vining, 1992, p.283). Therefore $4.9 million is the expected present value of the benefit of building a dam. This figure is then used in a comparative analysis with the present net value figures from other policy alternatives to determine which alternative provides the best cost to benefit ratio. Once again, the important caveat to remember is that the $4.9 million dollar benefit figure represents the best guess for this alternative, not an irrefutable fact. It is possible that no floods will occur over the next 20 years and therefore the true cost for this alternative would actually be a -$5 million.

 

 

L06 Cost-Benefit Analysis: Choosing Among Alternatives

The key principle to remember concerning the cost-benefit analysis process is that the preferred policy option is normally the one that produces the greatest benefit to society. If resources limit the selection to only one policy alternative then the option that produces the greatest expected net benefit certainly warrants additional consideration and evaluation and will more than likely be the selected option. It is also important to remember that the raw numbers of the cost-benefit analysis may not adequately represent a number of intangible policy considerations to include: symbolic and political motivations and especially ephemeral societal values. “The calculation of net benefits answers the question: Does the policy generate sufficient benefits sot that those who bear its costs could at least potentially be compensated so that some people could be made better-off without making anyone worse-off…The art lies in making reasonable inferences from data that are usually fragmented and incomplete. The art also lies in realizing when inadequate data or social values other than efficiency make the narrow cost-benefit approach inappropriate (Weimer and Vining, 1992, p. 311).”

L06 Limitations of the Cost-Benefit Analysis Procedure

As mentioned in the previous section of this lesson, when using cost-benefit analysis as a decision support procedure it is critical to remember that the process is based on numerous assumptions concerning the future impact of various policy alternatives that frequently lead to poor policy choices when those alternatives are evaluated and selected solely on the basis of this technique. The following chart identifies a list of important underlying limitations that must be recognized and critically evaluated if we expect this decision-making tool is to provide any reliable assistance with policy selection.

Key Cost-Benefit Analysis Limitations

• Inability to identify all potential costs and benefits
• Assigning monetary values to non-monetary outcomes (such as values)
• Inability to accurately identify the time-span for costs and benefits
• Arbitrary selection of the discount rate
• The value of costs and benefits are assumed to be equal among all stakeholders
• Political and social values are frequently ignored
• The assumption that the alternatives being evaluated comprise the universe of potential alternatives (in other words, a really good idea may not be one of the alternatives being considered because no one thought of it or it may have been eliminated as a choice in an earlier stage of consideration)
• The reification of the analysis results
• Frequently employed by policy-makers to deflect criticism
• Frequently employed as the sole decision-support technique

Cost-Benefit Analysis Technique

The cost-benefit analysis technique certainly has its advantages in that it attempts to provide a rational basis to the identification and selection of complex public policy alternatives. All too often however the cost-benefit analysis technique is used because actual real-world costs are easy to obtain, quantify, evaluate, and contrast against a variety of metrics or other policies or programs. Unfortunately, many intangible benefits, such as the advantages gleaned by a well-educated society, may not be readily visible for many years to come, and some intangible benefits are impossible to quantify such as the quality of life. Policy evaluators must constantly be aware that the costs and benefits used in any evaluation may not accurately, if at all, represent the real impact of a given policy or program. Instead, a cost-benefit analysis should be employed as one of several methods used to determine the efficacy or efficiency of government action. “Cost-benefit analysis can be used to avoid difficult political decisions and to yield responsibility to experts who can supply the ‘correct’ answer. Such fundamental abdication of political responsibility is indeed an ‘insidious poison in the body politick.’ Only when the results of analysis are integrated with other forms of analysis, including ethical analysis, and combined with sound judgment can the ‘correct decision’ be made (Peters, 2016, p. 464).”

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L06 Ethical Considerations in the Policy Process

Relatively few topics can elicit the intense and acrimonious debate as that engendered by the discourse of ethics. However, the need for ethics and moral reasoning in any human endeavor, and especially public policy-making, should be self-evident. While most people will concede that ethical behavior is a generically desired value, the consensus diverges rapidly beyond this basic agreement. Inherently, ethics and morality is a social enterprise, which is constantly evolving as society progresses through intellectual advancement (Van Wart, 1996). However, certain values concerning the sanctity of human existence have been perpetuated for millennia and have generally been recognized by most societies, although certainly not all, as preeminent moral virtues. For example, the sacredness of human life is revered by normative American culture as the ultimate moral value, yet even today a strong undercurrent of racism and sexism exists in juxtaposition to this lofty virtue. Along with the sanctity of human life, a variety of other values have been considered significant throughout history and equated with a normative definition of morality: honesty, integrity, diligence, courage, justice, compassion, and humility.

As there is a lack of a clear and universal agreement concerning what is or is not ethical behavior one can reasonably ask what value an ethical analysis has for the exercise of public policy-making. Bowman (1990) states that one of the major roles of government is to generate a societal atmosphere where mutual obligation and respect are the norm, so conducting an ethical evaluation is critical for manifesting and maintaining public confidence and trust. He expands on this thesis by emphasizing that in a republican form of government, where career civil servants exercise a wide latitude of discretion, “[a]n understanding of ethics, the way values are practiced, is therefore pivotal in democracy (1990, p. 345).” Jennings (1991) echoes this sentiment by stating that in a liberal democratic polity, normative moral values such as justice, equity, accountability, individual rights, and the common good, are indispensable attributes of our representative and administrative government. He encourages ethical discourse as a form of governmental legitimacy and as a way to enhance the internal moral life and professional ethos of all who serve the people and the subsequent policy decisions that these public servants make.

It must be emphasized that a panacea to help policy actors identify solutions to the endless stream of ethical dilemmas inherent in public policy-making does not exist. However, what does exist are a number of beneficial techniques that policy-makers can use to assist them in finding morally sound solutions to the complex public problems that they face. One such technique is described by its Dwight Waldo (1980) as a “map of sorts” to help guide ethical behavior and the selection of policy alternatives. Waldo provides a list of 12 sources of ethical obligations to which public policy-makers are expected to acknowledge as they conduct their comparative policy analysis. Waldo asserts that these ethical obligations are not listed in any specific order, and that the total number was arbitrarily determined. However, he believes that the value obtained from an evaluation of these obligations lies in the knowledge gained through the intellectual discourse initiated by this awareness. He also emphasizes that like a map this list of obligations should help policy-makers to find their way through the ethical quagmire of public decision-making.

Waldo's Sources of Ethical Obligation

• The obligation to the values and principles of the U.S. Constitution
• The obligation to the law
• The obligation to the nation
• The obligation to the principles of democracy
• The obligation to organizational and bureaucratic norms
• The obligation to one's profession and to the philosophy of professionalism
• The obligation to family and friends
• The obligation to yourself
• The obligation to personal associations such as political party, union, interest group, etc.
• The obligation derived from the public interest or general welfare
• The obligation to humanity and the world
• The obligation to one's religion or God

In summary, the purpose of this section has been to highlight the complex and ambiguous nature of the ethical dilemmas routinely experienced by public policy-makers as they discharge their official duties. Dwivedi (1988) outlines the moral ambiguity of public policy-making by accentuating the temporal nature of morally acceptable or reprehensible behavior. Consequently, he contends that public servants who are perceived as exemplars of public service are those who strive to create a moral government in addition to attaining the traditional values espoused by democratic and bureaucratic principles. He stresses that this ethical perspective should be viewed as more than just a positive attribute instead it should be seen as a moral duty. In conclusion, Dwivedi provides an eloquent synopsis for the significance of ethical decision-making by declaring that “[o]nly by demonstrating the highest standards of personal integrity and morality can public officials inspire public confidence and trust, the true hallmarks of moral government (1988, p. 318).”

While cost-benefit analysis attempts to provide rational quantitative support for difficult decisions, ethical analysis furnishes a complimentary decision-making technique emphasizing the subjective or qualitative aspects of public policy. Neither technique when employed alone provides a adequate analysis of policy alternatives but when used collectively as part of a comprehensive policy evaluation strategy they become powerful tools which will help to minimize unintended or undesirable policy outcomes or impact.

 

 

L06 Summary

Rational decision-making models assume perfect knowledge. Additionally, these models assume that policy actors will choose policy alternatives that produce the greatest level of benefits given the costs as opposed to simply formulating a solution that works. In other words, rational models assume that policy actors are always attempting to maximize social gain. The stages heuristic model of the policy process, which is an integral component of this course, is an excellent example of a rational decision-making model. The basic assumption underlying all rational decision-making models is that policy actors have the ability to adequately evaluate all possible courses of action and to effectively distinguish between those alternatives that provide the greatest level of benefits and those that do not.

As discussed in Lesson 3, the inability to adequately circumscribe and define most social problems is a critical shortcoming of the policy process and to some extent can be partially mitigated through the implementation of limited policy changes as opposed to sweeping and radical reforms. Additionally, as we have discussed, there are extreme difficulties encountered with accurately identifying the target population. Consequently, incremental changes reflect the political necessity for compromise in our pluralistic democracy. These minor changes acknowledge the fact that existing policies represent government investment (sunk costs) such as the establishment of agencies, the hiring of employees, the construction of buildings, or the commitment to provide benefits to eligible recipients, or restrict certain types of behavior. Unlike incremental change, comprehensive policy change can often represent the loss of millions of tax dollars that have already been obligated to specific policy alternatives.

One of the most common decision-making tools employed by policy actors as they attempt to evaluate the advantages and disadvantages of competing policy alternatives is the cost-benefit analysis. The cost-benefit analysis represents an attempt to incorporate rational decision-making methods into a policy process that can be characterized as being chronically short of information, resources, time, and as having an overabundance of competing stakeholders and their values attempting to influence the resulting policy decisions in such a manner as to benefit their parochial interests. Simply stated, a cost-benefit analysis is the comparison of the costs associated with a policy or program to the benefits generated by that policy. The outcome of this comparison should clearly identify the policy alternative that produces societal benefits that are greater than the cost of other alternatives. If multiple alternatives produce benefits that exceed the cost, and if all such projects cannot be undertaken due to limited resources, then it is assumed that the policy alternative that produces the greatest level of benefits for society would be selected.

All too often however the cost-benefit analysis technique is applied because actual real-world costs are easy to obtain, quantify, evaluate, and contrast against a variety of metrics or other policies or programs. Unfortunately, many intangible benefits, such as the advantages gleaned by a well-educated society, may not be readily visible for many years to come, and some intangible benefits are impossible to quantify such as the quality of life. Policy evaluators must constantly be aware that the costs and benefits used in any evaluation may not accurately, if at all, represent the real impact of a given policy or program. Instead, a cost-benefit analysis should be employed as one of several methods used to determine the efficacy or efficiency of government action.

Relatively few topics can elicit the intense and acrimonious debate as that engendered by the discourse of ethics. However, the need for ethics and moral reasoning in any human endeavor, and especially public policy-making, should be self-evident. While most people will concede that ethical behavior is a generically desired value, the consensus diverges rapidly beyond this basic agreement. Inherently, ethics and morality is a social enterprise, which is constantly evolving as society progresses through intellectual advancement (Van Wart, 1996). However, certain values concerning the sanctity of human existence have been perpetuated for millennia and have generally been recognized by most societies, although certainly not all, as preeminent moral virtues. Since there is a lack of a clear and universal agreement concerning what is or is not ethical behavior one can reasonably ask what value an ethical analysis has for the exercise of public policy-making. Bowman (1990) argues that because one of the major roles of government is to create a societal atmosphere where mutual obligation and respect are the norm, the practice of conducting an ethical evaluation of is critical for the manifestation and maintenance of public confidence and trust.

While cost-benefit analysis attempts to provide rational quantitative support for difficult decisions, ethical analysis furnishes a complimentary decision-making technique emphasizing the subjective or qualitative aspects of public policy. Neither technique when employed alone provides a adequate analysis of policy alternatives but when used collectively as part of a comprehensive policy evaluation strategy they become powerful tools which will help to minimize unintended or undesirable policy outcomes or impact.

 

 

 

L06 Group Policy Review Activity - Education Policy

 

In reference to cost-benefit analysis, Peters states the following. “Cost-benefit analysis has been referred to as ‘nonsense on stilts.’ This rather rude description implies that there are so many assumptions involved in the calculations, and so many imponderables about the future effects of projects, that cost-benefit analysis is the functional equivalent of witchcraft in the public sector. Although phrased in exaggerated language, this criticism is to some degree well taken. It is difficult, if not impossible, to know the value of eliminating an externality, just as it is difficult to know just how much life, health, and snail darters are worth economically (Peters, 2016, p. 464).”

 

• Explain why the cost-benefit analysis process in your policy area. Can it be described as an attempt to employ rational decision-making processes?
• How is your policy budgeted? How much is being authorized and spent? Note: You can use the policy agendas data here, particularly the graphing, and ask for budget figures. What arguments are used to make it politically accepted as a budgetary expense? How have political debates over budgeting in your area played out? That is, what are the arguments for increasing and/or decreasing the amount allocated and spent?
• In the lesson material, the cost-benefit analysis procedure is described as being composed of 4 basic concepts: 1) Determining costs and benefits; 2) assigning value; 3) discounting; and 4) Choosing among alternatives. Earlier in this course, you identified various alternatives in the policy process related to your policy choice (this was explicit or implicit in the agenda setting phase). Choose any two of them and perform a cost-benefit analysis on the two (if you can identify the two most likely scenarios, i.e. the one that was finally passed and the one that was its most closely contested alternatives).