Intro to Public Policy Notes
CONCEPTUAL FOUNDATIONS
Module A: Introduction
- What is democratic public policy?
- What is public policy?
- Explaining why the government acts (or fails to act), when it does, and what the
consequences of such actions are
- Politics v. policy?
- Politics is all about the contestation that leads to the selection of a policy
- Policy = once a law is passed, how are changes implemented? What
consequences do they have?
- What is democracy?
- Rule by the people or representatives elected in free and fail elections by the
people
- Benefit? Challenge?
- Benefit = there is some degree of responsiveness to the popular will
- Benefit = democracies don’t generally go to war with other democracies
- Challenge = can be considered messy, whereas an authoritarian regime
can just make a decision and act fast / pursue unpopular policies
- In a democracy there are many interest groups, business elites, etc. and
all these different people with different interests have to be balanced
- What is democratic public policy?
- Government action that is responsive to majority preferences
- Opportunities and challenges
- Opportunities
- Preference identification - create policies that have something to do with what
people want
- Agenda setting - it’s not just how do we answer the question of some policy, it’s
which policies do we even talk about in the first place
- Alternative specification
- Implementation - what bureaucrats do we hire, what regulations do we write,
what incentives do people have to follow a policy, etc.
- Evaluation - once a policy is in place, how do we evaluate it? How do we look at
the results and say this is successful or this is not successful?
- Challenges
- Preference aggregation dilemmas
- Delegation dilemmas
- Credible commitment dilemmas
- Bargaining dilemmas
- Cooperation and coordination dilemmas
- Our approach
- An analytic approach
- Individuals are the foundational decision-making agents
, - Individuals maximize their own utility
- Institutions (rules or norms governing processes and choices in an issue area)
create incentives that influence individual choices
- Individuals have limited information
- Public policy outcomes are the product of social interactions
- The scientific method
1) Ask a question - think of an outcome, which varies, that you wish to explain
2) Form a theory that is able to explain variation in the outcome
3) Derive a hypothesis, or a testable statement, from the theory
4) Test the hypothesis
5) Analyze the data to assess the hypothesis’ validity
- Public policy models
- Why study public policy? Three reasons:
- Hold government accountable
- Increase efficiency
- Increase equity
- The process
- Governance in the US is complex, but preferable to authoritarianism for
achieving our three goals - but there is often still a gap between majority
preferences and outcomes
- Defining problems and solutions, and policy entrepreneurship
- Stakeholders, collective action problems, “dominant policy images” (frames),
and policy demands
- Policy windows and agenda setting (ex. Affordable Care Act)
- Choosing a policy
- Considerations:
- Policy effectiveness
- Cost
- Technical feasibility
- Political feasibility
- Implementation
- Regulatory Agency
1) Bureaucracy engages in rulemaking
2) Bureaucracy enforces rules
- Non-Regulatory Agency
- Provide service to a clientele
- Models of public policy
- A model is a statement of how policy inputs lead to outputs
- A causal relationship: if X, then Y; if not X, then not Y (X has to make the
difference for Y
- Necessary v. sufficient - X is necessary for Y if Y only happens if X is present; X
is sufficient for Y if Y always happens whenever X is present
- Conditional causality: inputs might have different effects on outputs depending
on whether some third factor is present
, - Deterministic v. probabilistic - we’re going to think in terms of probabilities and
in errors across data sets, not in deterministic relationships
- Elements of a good model
- Multivariate
- Probabilistic
- Parsimonious
- Generalizable
- Falsifable
- Clear and logically consistent
- Ideologically neutral
Module B: Individuals and Social Dilemmas
- Game Theory
- Game Theory → a mathematical tool to study strategic decision making
- Decision Theory → the study of how actors make decisions
- Exogenous → externally determined - the actor’s decisions have no impact on exogenous
factors
- Endogenous → internally determined - the actor’s decisions have an impact of
endogenous factors
- Game Theory is concerned with endogenous relationships
- Game Theory attempts to answer a basic question - conditional on what an actor expects
others to do, what choice will a self-interested actor make?
- Individual Action
- Society is composed of individuals
- Individual choice and individual preferences have implications for group decisions
- Personal Utility Maximization
- Rational Choice: “patterns of behavior in societies reflect the choices made by
individuals as they as they try to maximize their benefits and minimize their costs”
- To make a rational choice, an actor must be able to discern the following:
- See all possible choices
- Weigh the costs and benefits of all choices
- Express and pursue what they deem best
- Comparing Alternatives: Utility Functions
- If an actor is “rational” they will select the choice that gains them the highest utility
- Utility of actor A = U(a)
- Ordinal Preferences = Rank Preferences
- Ex. A=2, B=1; B is preferred to A
- Cardinal Preferences = Continuous Valuation
- Ex. A=2, B=1; A is preferred TWICE AS MUCH as B
- Between any two items in a set, preferences can be…
- Strictly preferred
- Weakly preferred
- Indifferent
- In order to be rational, preferences must be:
, - Complete
- Transitive: If A>B and B>C, then A>C
- Cooperation Problems
- Scenario
- Two loggers (A and B)
- They are cutting down trees in a rainforest
- Two choices:
- Cooperate = sustainably cut down trees
- Defect = cut down a ton of trees
- Actor Behavior
- The players act alone (not together)
- Each actor wants to maximize their utility
- In light of what the other actor does, how can I maximize my payoffs?
- Nash Equilibrium → set of strategies such that no player can unilaterally improve their
position given the other player’s action
- Essentially the Nash Equilibrium reveals both players’ best response given the
other’s action
- Assigning Payoffs
- Situation 1
- If both players cooperate: the forest is preserved and both collect a good payoff
- Situation 2
- If 1 player defects and the other cooperates, the defector collects a large share of
the first profits while bearing none of the costs
- The other bears the costs of commitment but receives none of the benefits
- The forest is harmed
- Situation 3
- If both players defect, the forest is destroyed and the payoffs for each player
suffers
- Game Solution
- The Nash Equilibrium is Defect, Defect
- Implication
- Both individuals and society would have been better off if they had both
cooperated
- Instead the forest is destroyed and they are harmed
- Overcoming Cooperation Problems: Repeated Interaction
- An unrealistic expectation of the previous game is that it occurs only once
- In many real-world scenarios games are played repeatedly over time
- How much individuals value gains NOW, versus GAINS LATER - gains later determines
how effective future interactions will yield short term success
- Discount Factor
- The degree which people discount future benefits relative to current ones
- Ranges from 0-1 → 0 = no value for the future, 1 = value future gains equally
- Present value: How much is a promise of a future gain worth to you now?
CONCEPTUAL FOUNDATIONS
Module A: Introduction
- What is democratic public policy?
- What is public policy?
- Explaining why the government acts (or fails to act), when it does, and what the
consequences of such actions are
- Politics v. policy?
- Politics is all about the contestation that leads to the selection of a policy
- Policy = once a law is passed, how are changes implemented? What
consequences do they have?
- What is democracy?
- Rule by the people or representatives elected in free and fail elections by the
people
- Benefit? Challenge?
- Benefit = there is some degree of responsiveness to the popular will
- Benefit = democracies don’t generally go to war with other democracies
- Challenge = can be considered messy, whereas an authoritarian regime
can just make a decision and act fast / pursue unpopular policies
- In a democracy there are many interest groups, business elites, etc. and
all these different people with different interests have to be balanced
- What is democratic public policy?
- Government action that is responsive to majority preferences
- Opportunities and challenges
- Opportunities
- Preference identification - create policies that have something to do with what
people want
- Agenda setting - it’s not just how do we answer the question of some policy, it’s
which policies do we even talk about in the first place
- Alternative specification
- Implementation - what bureaucrats do we hire, what regulations do we write,
what incentives do people have to follow a policy, etc.
- Evaluation - once a policy is in place, how do we evaluate it? How do we look at
the results and say this is successful or this is not successful?
- Challenges
- Preference aggregation dilemmas
- Delegation dilemmas
- Credible commitment dilemmas
- Bargaining dilemmas
- Cooperation and coordination dilemmas
- Our approach
- An analytic approach
- Individuals are the foundational decision-making agents
, - Individuals maximize their own utility
- Institutions (rules or norms governing processes and choices in an issue area)
create incentives that influence individual choices
- Individuals have limited information
- Public policy outcomes are the product of social interactions
- The scientific method
1) Ask a question - think of an outcome, which varies, that you wish to explain
2) Form a theory that is able to explain variation in the outcome
3) Derive a hypothesis, or a testable statement, from the theory
4) Test the hypothesis
5) Analyze the data to assess the hypothesis’ validity
- Public policy models
- Why study public policy? Three reasons:
- Hold government accountable
- Increase efficiency
- Increase equity
- The process
- Governance in the US is complex, but preferable to authoritarianism for
achieving our three goals - but there is often still a gap between majority
preferences and outcomes
- Defining problems and solutions, and policy entrepreneurship
- Stakeholders, collective action problems, “dominant policy images” (frames),
and policy demands
- Policy windows and agenda setting (ex. Affordable Care Act)
- Choosing a policy
- Considerations:
- Policy effectiveness
- Cost
- Technical feasibility
- Political feasibility
- Implementation
- Regulatory Agency
1) Bureaucracy engages in rulemaking
2) Bureaucracy enforces rules
- Non-Regulatory Agency
- Provide service to a clientele
- Models of public policy
- A model is a statement of how policy inputs lead to outputs
- A causal relationship: if X, then Y; if not X, then not Y (X has to make the
difference for Y
- Necessary v. sufficient - X is necessary for Y if Y only happens if X is present; X
is sufficient for Y if Y always happens whenever X is present
- Conditional causality: inputs might have different effects on outputs depending
on whether some third factor is present
, - Deterministic v. probabilistic - we’re going to think in terms of probabilities and
in errors across data sets, not in deterministic relationships
- Elements of a good model
- Multivariate
- Probabilistic
- Parsimonious
- Generalizable
- Falsifable
- Clear and logically consistent
- Ideologically neutral
Module B: Individuals and Social Dilemmas
- Game Theory
- Game Theory → a mathematical tool to study strategic decision making
- Decision Theory → the study of how actors make decisions
- Exogenous → externally determined - the actor’s decisions have no impact on exogenous
factors
- Endogenous → internally determined - the actor’s decisions have an impact of
endogenous factors
- Game Theory is concerned with endogenous relationships
- Game Theory attempts to answer a basic question - conditional on what an actor expects
others to do, what choice will a self-interested actor make?
- Individual Action
- Society is composed of individuals
- Individual choice and individual preferences have implications for group decisions
- Personal Utility Maximization
- Rational Choice: “patterns of behavior in societies reflect the choices made by
individuals as they as they try to maximize their benefits and minimize their costs”
- To make a rational choice, an actor must be able to discern the following:
- See all possible choices
- Weigh the costs and benefits of all choices
- Express and pursue what they deem best
- Comparing Alternatives: Utility Functions
- If an actor is “rational” they will select the choice that gains them the highest utility
- Utility of actor A = U(a)
- Ordinal Preferences = Rank Preferences
- Ex. A=2, B=1; B is preferred to A
- Cardinal Preferences = Continuous Valuation
- Ex. A=2, B=1; A is preferred TWICE AS MUCH as B
- Between any two items in a set, preferences can be…
- Strictly preferred
- Weakly preferred
- Indifferent
- In order to be rational, preferences must be:
, - Complete
- Transitive: If A>B and B>C, then A>C
- Cooperation Problems
- Scenario
- Two loggers (A and B)
- They are cutting down trees in a rainforest
- Two choices:
- Cooperate = sustainably cut down trees
- Defect = cut down a ton of trees
- Actor Behavior
- The players act alone (not together)
- Each actor wants to maximize their utility
- In light of what the other actor does, how can I maximize my payoffs?
- Nash Equilibrium → set of strategies such that no player can unilaterally improve their
position given the other player’s action
- Essentially the Nash Equilibrium reveals both players’ best response given the
other’s action
- Assigning Payoffs
- Situation 1
- If both players cooperate: the forest is preserved and both collect a good payoff
- Situation 2
- If 1 player defects and the other cooperates, the defector collects a large share of
the first profits while bearing none of the costs
- The other bears the costs of commitment but receives none of the benefits
- The forest is harmed
- Situation 3
- If both players defect, the forest is destroyed and the payoffs for each player
suffers
- Game Solution
- The Nash Equilibrium is Defect, Defect
- Implication
- Both individuals and society would have been better off if they had both
cooperated
- Instead the forest is destroyed and they are harmed
- Overcoming Cooperation Problems: Repeated Interaction
- An unrealistic expectation of the previous game is that it occurs only once
- In many real-world scenarios games are played repeatedly over time
- How much individuals value gains NOW, versus GAINS LATER - gains later determines
how effective future interactions will yield short term success
- Discount Factor
- The degree which people discount future benefits relative to current ones
- Ranges from 0-1 → 0 = no value for the future, 1 = value future gains equally
- Present value: How much is a promise of a future gain worth to you now?
