Intro to Public Policy Public Policy Book Definition what the government does or does not do about public problems healthcare environment education Public Policy Professor Definition Public Policy is when the government replaces individual choice with collective choice Examples Healthcare you have to buy health insurance replacing individual choice with collective choice Immigration who decides whether you can become a citizen or not What is the Justification for Public Policy We can find it in the preamble of the Constitution establish justice insure domestic tranquility provide common defense promote general welfare Tension in Public Policy Individual Liberty versus Collective Choice In Anarchy Thomas Hobbes says life is solitary poor nasty brutish and short How do we decide the appropriate level of government involvement We know the government has to do something but what are those something s and why Normative Statement expresses a value judgment about whether something is desirable Subjective an opinion Uses words like should not falsifiable Example People should not pay high taxes Empirical Statement expresses a fact about the state of the world Objective a statement of fact Often posted as if then statements Hypothesis falsifiable some statements are not true Example if the government raises taxes businesses will hire fewer workers Policy Science Can we study public policy scientifically What is science A list of empirical statements A method about how we approach the world theory 1 2 hypothesis 3 empirical test 4 conclusion 5 revise theory form a falsifiable statement gather data qualitative or quantitative test and determine if your hypothesis is right How do we analytically think through problems Logic and Policy Preferences Preferences about policy are usually articulated as normative statements what should shouldn t the government do in situation X A logical argument a connects a normative statement with an empirical statement b reaches a conclusion about preference for a policy Example 1 Statements People should eat healthy Normative Statement If we adopt a policy that mandates restaurants disclose how many calories are in their food then people will make healthier eating choices Empirical Statement Therefore the government should mandate that restaurants disclose how many calories are in their food Policy preference based on logical argument Compromising on differences an values is much more difficult to over come than how you asses the empirical evidence No true or false with normative statement hard to have a productive policy discussion when you argue about values and not facts Disagreement About Values Pro EQUAL OPPORTUNITY 1 Everyone should have the opportunity to go to college 2 if more money was available for college then more students would attend 3 The government should increase support for Pell grants Con LIBERTY 1 The government should not force some people to pay for others education 2 If more money was available for college then more students would attend 3 The government should decrease support for pell grants Difference in Opinion Empirically based what does science say We can test these Value based values not universal Multiple values involved Which are important to you Types of Values Individual Liberty right to make your own decision Communitarianism decisions should be made at the community level Civic duty Patriotism should do things out of the sense of patriotism or civic duty people are unwilling o compromise on these values Effectiveness how well does this policy achieve its objectives Efficiency how well does it achieve its goal at the lowest cost Equity who benefits who loses Feasibility technical and political proposed policy technically feasible politically feasible Limits of Policy Science We can identify if policies promote liberty communitarianism or patriotism acheieve efficiency equity effectiveness or are feasible we can not identify which of these values should be prioritized you must decide what you value we will emphasize empirical statements and respect others values SEPTEMBER 2nd Efficiency Scarcity implies the need to ration goods and services There are many ways to do this Goods are efficiently providing to the extent that they provide the maximum benefits to society Net benefits benefits costs Benefits to consumers Costs to producers Put differently there is no way given the current technology that the good can be produced at less cost and still provide the same amount of benefits to society Market Efficiency Market economies allocate goods through the price mechanism Assertion 1 open and competitive markets efficiently provide goods and services o Competition lowers costs of production and therefore lowers prices for consumers o Caveat certain conditions must be met Example what would happen if an orchard used expensive labor paid its workers 20 an hour to pick apples Their apple prices would be higher than other orchards Grocery stores would by apples from cheaper orchards The orchard would have to use cheaper labor or go out of business Planned Economies Isn t there a lot of waste in market economies Planned economy a committee decides how goods and services will be allocated What information does the committee have access to Generally not as efficient as market economies Example Starting a Restaurant You want to serve salad Suppose you were on the Restaurant Committee in a planned economy What would you have to plan Suppose you are in a market economy and you want to start a restaurant What would you have to plan Don t have to coordinate anything Adam Smith called it the invisible hand Equity Notion that goods are allocated according to need or some other criteria Does everyone who needs a salad have a salad U S has market economy provide at lowest cost possible yet not everybody has salads food deserts Assertion 2 Markets are often inequitable Caveat here we re talking about equity in outcomes not in terms of process Comparison Efficiency a big pie Equity distribution of pie Market Failure Instances when free markets produce an inefficient allocation of resources i e we could produce the good or service more cheaply or that provide more benefits Examples Monopolies Externalities Information Asymmetries Collective Action Problems Monopoly exists when a single business provides a good for which there are no close substitutes ex sports league like NBA No competition Consequences If they had competitors they would have to
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