PUBPOL 2301 Quiz #2

policy analysis

identifying policy solutions that could address a public problem

Private sector

regulatory compliance, market strategy, corporate social responsibility

nonprofit sector

advocacy, program design and evaluation, resource allocation

Step 1 of Policy Analysis

define the public problem: economic, ethical, and political rationales

economic rationales

is there a market failure? a cost to society/the economy?

ethical rationales

is there a violation of fairness or justice?

political rationales

are current policies/administrations failing to address the problem?

operational measures

quantitative indicators of the public problem

magnitudes

ranges to the operational measures

Step 2 of Policy Analysis

construct the policy alternativesp

policy alternatives

different potential courses of action; policy proposals

regulatory tools

require ot prohibit certain behaviors

economic and market-based tools

alter economic incentives to shift behavior

information and persuasion tools

inform, persuade, or nudge to change behavior

organizational tools

develop structures to manage resources, deliver services, or enforce compliance

economic regulation

commonly applied to activities in a particular industry to protect consumers, promote fair competition, and manage monopolies

examples of economic regulation

price controls, quantity controls, service quality controls, market entry/exit controls

price controls

set a maximum or minimum price

examples of price control

rent control, minimum wage, prescription drug pricing, electricity rate caps

quantity controls

control the amount of a good or service that can be producede

examples of quantity controls

taxi medallions, fishing quotas

service quality controls

ensure that services meet specific standardsw

examples of service quality controls

food safety, nursing home quality

market entry/exit controls

manage the number of firms, by limiting new entrants or regulating form exit from a market

examples of market entry/exit controls

bank charters, hospital certificate of need, public utility exit

social regulation

focuses on negative externalities and information asymmetries, in areas such as environmental protection, consumer safety, or labor standards

examples of social regulation

means-based, performance-based, disclosure

means-based regulation

sets specific methods, technologies, or standards that businesses must adopt

examples of means-based regulations

pollution control equipment (e.g. scrubbers and catalytic converters)

performance-based regulations

define the desired outcome or goal but allow regulated entities to choose the best method to achieve it

examples of performance-based regulations

vehicle emission levels, power plant emission levels

disclosure regulations

control what information must be shared, in order to allow consumers to make informed choices

examples of fisclosure regulations

appliance energy ratings, nutrition labels

key features of regulatory tools

mandatory and transparent standards, backed by penalties

disadvantages of regulatory tools

enforcement costs, compliance costs, market distortions, discourage innovation, reduce competition, regulatory capture, rigidity to changing circmstances

The Administrative Procedures Act

provides a uniform framework for the process of developing rules and regulations

informal rulemaking

agency proposes a rule or standard and invites public comment through a Notice of Proposed Rulemaking, proposed rule is published in the Federal Register, agency reviews public comments and decides whether to publish a final rule

formal rulemaking

happens only when statute says rulemaking must be “on the record;” involves hearings and the presentation of formal documentation to support the rule in front of a commission or administrative law judge

government taxation

what you earn, buy, and own

Income tax

taxation on what you earn, federal income taxation is progressive

progressive

tax rates increase as income increases

Payroll Taxes

taxation on what you earn, paid on wages and salaries to finance social insurance programs (Social Security 12.4% and Medicare 2.9%)

Capital Gains Taxes

taxes on gains from assets owned for personal purposes or investments

Corporate Income Taxes

tax levied by federal and state governments on business profits (21%)

Sales Tax

a consumption tax on goods and services, significant source of state and local revenue, regressive

regressive

larger percentage of income paid by low income households

Excise taxes

taxes imposed on a specific good or activity, usually a small share of consumption activity; called sin or Pigovian taxes; offset negative externality of consumption

Property Taxes

property’s assessed value times a tax rate; local taxes land, state taxes personal property; can deduct some from taxable income

Estate and Inheritance taxes

imposed on value of individual’s property at time of death

Wealth Taxes

uncommon, exist in some European nations

Tax Expenditures

exceptions to paying your full share of taxes (e.g. exemptions, deductions)

Subsidies

public payments aiming to influence levels of production or prices. can go to producers or consumers

agricultural subsidies

government-funded support for crop insurance and direct payments to farmers for erosion control and production

education subsidies

subsidized interest rates on student loans

manufacturing and tech subsidies

subsidieis for semiconductor manufacturing and other strategic industries

vouchers

government-funded coupons that allows consumers to purchase a specific good or service from approved providers

Section 8 Housing Choice Voucher Program

rent subsidy to low-income households for private market housing

GI Bill

tuitions and fees, housing allowances for veterans and service members

School voucher programs

public subsidies to parents to pay for tuition at their choice of school, rather than zoned public school

informational tools

non-coercive policy instruments that aim to change behavior through communication or choice architecture rather than financial incentives or legal mandates

inform

provide factual, neutral information to improve decision-making; aims to reduce information asymmetry; assumes lack of information is a key cause of the problem

persuade

actively shape attitudes or norms through messaging and framing; aims not only to provide information, but to shift beliefs and values

nudge

small changes to choice architecture (e.g. automatic enrollment in retirement savings)

direct public provision

government directly provides goods or services using public employees and public agencies

grants and contracts

given to organizations to deliver services (e.g. pfizer)

public-private partnerships

long-term collaborative agreements between government and private sector t finance, build, or manage public infrastructure or services

authorize ner market designs

marketabke/tradable permits, insurance exchanges

marketable/tradable permits

systems like cap-and-trade that allows firms to buy and sell permits for emissions

insurance exchanges

systems like state and federal public health insurance exchanges (marketplaces) authorized by the Affordable Care Act

evaluative criteria

specific dimensions of policy objectives that can be used to weigh policy options or judge the merits of existing policies

effectiveness

likelihood of achieving goalse

efficiency

value of benefits in relation to dollar cost

equity

fairness in distribution of the policy’s costs, benefits, and risks across group

feasibility

extent to which policy is feasible politically, socially, administratively, and technically

controls

did not receive a particular treatment or intervention

treated

received the treatment or intervention

non-experimental

measure outcomes for participants only or with a non-comparable control group

quasi-experimental

measure outcomes for participants and non-participants using quasi-random (as good as random) assignment

experimental/RCT

randomize participants to treatment or control group

counterfactual

what could have happened if the policy wasn’t implemented

non-experimental designs

measure outcomes before and after program for participants only + no comparison group

non-experimental designs: naive comparisons

measure outcomes before and after programs for participants + a comparison that does not attempt to adjust for consumers

confounders

omitted variables that can bias the associations

non-experimental designs: regression adjustment

measure outcomes before and after program for participants + a comparison group that attempts to adjust for observed confounders; all potential confounders are observed without error

experimental/RCT

randomized control trial; randomize participants to treatment or control group; randomization removes differences between T and C

field experiments

a scientific research study conducted in a real-world setting, outside of a controlled laboratory

quasi-experimental

measures outcomes for participants and non-participants using quasi-random (as good as random) assignment + attempts to make assignment into T and C groups “as good as random”

quasi-experimental approaches

regression discontinuity, difference-in-differences, interrupted time series

quasi-experimental approaches: regression discontinuity

assign treatment and control conditions based on proximity to an eligibility cut-off score

regression discontinuity limits

limits sample to applicants right around the eligibility cutoff, treated and untreated applicants right above and right below the eligibility cutoff do not differ on other unobserved characteristics

regression discontinuity advantage

stronger internal validity because we are more confident in our ability to account for unobserved confounders

regression discontinuity tradeoff

weaker external validity because the results may not generalize to the broader population

quasi-experimental approaches: differences-in-differences

compare the changes in outcomes over time between a population enrolled in a program and a population that is not yet enrolled

differences-in-differences assumption

parallel trends in outcomes for treated and control groups prior to intervention

difference-in-differences counterfactual

without the intervention, the treated group outcome would have proceeded on the same slope as the comparison group outcome

difference-in-differences

deviation/difference between what actually happened and the counterfactual (parallel) slope is interpreted as the effect of the intervention

difference-in-differences advantages

time-constant differences between treated and control groups, accounts for general trends and changes over time in outcome

quasi-experimental approaches: interrupted time series

tracking the outcome for a treated group over a long-term period before and after a point of intervention to assess their intervention’s effects

interrupted time series counterfactual

assumes that pre-intervention trend would continue in absence of the program

interrupted time series effect

deviation from the counterfactual is the effect of the program