Samenvatting Policy Analysis Concepts and Practice

ISBN-10 1317345649 ISBN-13 9781317345640
126 Flashcards en notities
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Dit is de samenvatting van het boek "Policy Analysis Concepts and Practice". De auteur(s) van het boek is/zijn David L Weimer Aidan R Vining. Het ISBN van dit boek is 9781317345640 of 1317345649. Deze samenvatting is geschreven door studenten die effectief studeren met de studietool van Study Smart With Chris.

Samenvatting - Policy Analysis Concepts and Practice

  • 2 What is policy analysis?

  • The definition of policy analysis is:
    Client-oriented advice relevant to public decisions and informed by social values.
  • 2.1 Policy analysis in perspective

  • Policy knowledge is divided by two dimensions (content vs process and audience) into four activities, being:
    • Policy research: focuses on relationships between variables that reflect social problems and other variables that can be manipulated by social policy (primary focus on the 'what' and audience is the community of researchers).
    • Policy process research: its frameworks and theories explains why and how the content of public policy changes or remains the same (primary focus on the how of policy making and audience consists largely of academics).
    • Stakeholder analysis: advice about strategy (primary focus on the 'how' for a specific client).
    • Policy analysis: focus on the 'what' of policy for a specific client.
  • 2.2 Policy analysis as a profession

  • Policy analysis's work in a variety of orgnizational settings on problems ranging in scope from municipal refuse collection to national defense.
  • 2.3 A closer look at analytical functions

  • Four major functions performed by ASPE analysts (a DHHS office):
    1. Analysts perform a 'desk officier' function that involves coordinating policy relevant to specific program areas and serving as a contact for the line agencies within DHHS that have responsibilities in these areas.
    2. Analysts perform a policy development function. 
    3. Analysts performs a policy research and oversight function.
    4. Analysts perform a 'firefighting' function (urgent tasks).
  • 2.4 Basic preparation for policy analysis

  • In order to integrate effectively the art and craft of policy analysis, preparation in five areas is essential. These are:
    1. Analysts must know how to gather, organize and communicate information in situation in which deadlines are strict and access to relevant people is limited.
    2. Analysts need a perspective for putting perceived social problems in context.
    3. Analysts need technical skills to enable them to predict better and to assess more confidently the consequences of alternative policies.
    4. Analysts must have an understanding of political and organizational behavior in order to predict, and perhaps influence, the feasibility of adoption and the successful implementation of policies.
    5. Analysts should have an ethical framework that explicitly takes account of their relationships to clients.
  • 4.1 The efficiency benchmark: the competitive economy

  • When deriving someone's utility function, we make two basic assumptions, namely:
    • The more of any good a person has, the greater that person's utility.
    • Additional units of the same good giver ever-smaller increase in utility; in other words, they result in declining marginal utility.
  • Economists refer to a distribution as Pareto efficient as:
    A set of prices that distributes factor inputs to firms and goods to persons in such a way that it would not be possible for anyone to find a reallocation that would make at least one person better off without making at least one person worse off.
  • 4.2.1 Consumer surplus: demand schedules as marginal valuations

  • A marginal valuation schedule indicates:
    How much successive units of a good are valued by consumers in a market.
  • The compensating variation of a price change is:
    The amount by which the consumer's budget would have to be changed so that he or she would have the same utility after a price change as before, which serves as a money metric.
  • 4.2.3 Producing surplus: measurement with supply schedules

  • Producer surplus is:
    The difference between total revenue and total cost
  • 4.2.4 Social surplus

  • Social surplus is defined as:
    The sum of consumer and producer surpluses in all markets.
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There are four problems with the practical implementation of efficient user fees:
  1. "price should equal marginal cost" is only the appropriate rule when all other prices in the economy also equal marginal cost. When this condition is not met, there is a second-best pricing problem. In such cases, the optimal price under consideration is in general not exactly equal to the marginal cost, and in some cases there can be a substantial gap between the two.
  2. Because marginal cost is often less than average cost, marginal cost pricing may involve prices that do not cover the costs of service provision. In the absence of subsidies, one approach is a two-part tariff, which can simultaneously satisfy the goals of efficiency and governments' revenue requirements.
  3. When users are accustomed to receiving a service at zero, or below, marginal prices, they do not like to start paying. In other words, policymakers must deal with the political feasibility.
  4. The transaction costs of implementing user fees may be too high to make them practical.
There re two efficiency rationales for user fees (also known as congestion taxes, peak-load pricing, marginal social cost pricing, license fees or fares):
  • The first is to internalize externalities (demand-side form of Pigovian tax)
  • Second is to price public goods appropriately, specifically in the context of congested public (toll) goods like bridges, and open-access resource public goods such as fishing grounds.
Critics argue that tax expenditures are less desirable than direct subsidies for two reasons:
  • Because tax expenditures emerge from relatively hidden debates about the tax code, their role as subsidies is not rigorously analyzed. Consequently, various forms of government failure, like rent seeking, are encouraged.
  • Tax expenditures are notorious for their inequitable distributional consequences. Higher-income individuals are much more able to take advantage of tax expenditures than members of lower-income groups, who, not surprisingly, pay little or no tax in the first place.
In-kind grants refer to the direct provision of a commodity to consumers. Rationales that might justify large in-kind subsidies and the necessary enforcement efforts to prevent trading of the subsidized good in black markets are:
  • One putative rationale for effective (large and non tradable) in-kind subsidies based on efficiency grounds is that the givers of the subsidies derive utility from the specific consumption patterns of recipients. In the presence of utility interdependence, in-kind transfers may be more efficient than unconstrained (cash) transfers.
  • Another possible rationale is that the good in question generate positive externalities.
Intergovernmental subsidies are usually referred to as:
Grants in aid, or simply grants.
The most common arguments used to justify tariffs are:
  • Protecting a fledging industry (the so-called infant industry argument) provides positive externalities.
  • Monopsony effects: If a country accounts for a large share of world demand for some good, then that country may be able to affect world price by restricting its demand through tariffs (or quotas).
  • where a country produces enough of a good to potentially have monopoly power in the world market. Individual domestic producers competing against each other will not be able to extract monopoly rents, but a government imposing an export tariff might be able to raise the world price and so extract the rent.
A tariff is:
A tax on imported, and occasionally exported goods. They generate deadweight losses in the absence of market failures. They also impede the development of global comparative advantage and specialization based on increasing returns to scale.
Output taxes are used to:
  • Internalization of negatives externalities
-> usually credited to A. C. Pigou and is often referred to as a Pigovian tax. The major advantage is that they allow firms (or consumers) the choice of how much to reduce production (or consumption) to limit their tax payments. The major problem is that the government need sot know the shapes of the social benefit and social cost schedules. Although lack of information usually makes it difficult to set optimal tax rates initially, it may be possible to approximate such rates by trial and error after observing how firms respond. 
  • Transferring rents 
Many natural resources generate scarcity rents. The distribution ion these rents is often a contentious public issue. Many different types of taxes have been used to transfer scarcity rents. While in theory some of these mechanisms could capture a portion of the scarcity rents, in practice none is likely to be completely neutral because of limited information.
Subsidies and taxes are market-compatible forms of direct government intervention. They aim to induce behavior rather than command it. We are primarily concerned with using taxes and subsidies in situation in which the intention is to correct market failures or achieve redistribution. They can have three possible impacts on efficiency:
  1. Where taxes and subsidies are aimed at correcting for externalities in particular markets, their impact may enhance efficiency.
  2. Where taxes and subsidies are to aimed at correcting a market failure, there is inevitably some net deadweight loss.
  3. Taxes may be used in an attempt to extract scarcity rents that arise in the use of natural resources such as oil.
If a market has not existed previously, then it does not make sense to talk about freeing it. Rather, the process is one of facilitating the creation of a functioning market either by:
  • Establishing property rights to existing goods
Allocating property rights effectively may be possible if the problem is institutional (instead of structural in nature). The allocation of property rights is usually extremely contentious however. Those who previously enjoyed use at below-efficient prices will undoubtedly oppose any distribution of property rights that makes them pay more. The allocation of property rights is complex, especially in public arenas, where many different individuals, groups, and organizations have some legitimate claim to some dimension of the property rights to new or contested assets. One way that governments can potentially facilitate markets is by bringing buyers and sellers togethers more efficiently through intermediation or a platform.
  • The creation of new marketable goods
The most common and important form of these goods are known as tradable permits, which convey rights to access resources or discharge pollutants. Under such a tradable permit system, firms maximize profits by restricting emissions to the point where the price of an additional emissions permit equals the marginal cost of abatement. If all firms in the industry can buy and sell permits, then each firm in the industry faces the same price for the last unit of pollution produced, and it would not be possible to find a less costly way of meeting the specified level of total emissions. From an efficiency perspective, the most telling criticism is that they are inferior to straightforward taxes.