policy quiz #3

rent-seeking

when organized interests use government power to advance their point of view

coalition government

a govt controlled by multiple parties at once

bardach step 1

define the problem

be careful how you write out the problem - don't put the solution in there

when do private troubles require public resources?

quantify, if possible

bardach step 2

assemble data - can be used to inform your analysis

be careful for selection bias and how you are using and interpreting the resulting descriptive statistics

bardach step 3

construct the alternatives

other policy possibilities - usually not making them up ourselves

use models (source contexts)

send alternatives to the public - always should be looking for feedback

bardach step 4

select the criteria

efficiency, effectiveness, equity/equality

make an outcomes matrix

chilling effect

when individuals refrain from getting their benefits because they are afraid of legal problems

bardach step 5

project the outcomes

projection = model + evidence

be realistic, DO IT

think of the opinions of all shareholders

bardach step 6

confront the tradeoffs

where are resources going to be best located?

status quo is also an option

primary responsibilities of congress

raise tax revenues and spend them in ways to benefit Americans

earmarks

mechanism by which members of congress insert money into projects

alaska's bridges to nowhere

logrolling

legislators get their buddies to sign on to bills for them (and vice versa) to get them passed

aggregating preferences

making the benefits of everyone into one public, collective decision

direct democracy

when all constituents vote directly in the election or referendum

referendum

a legislative act that is sent out to be voted on by the public

Cali's 2000 recall election

electoral college

a body of people representing the states of the US, who formally cast votes for the election of the president and vice president

at-large legislature

all of the representatives are elected by all of the constituents

single-member legislative districts

where only the members of that district are allowed to vote for their own representative

plurality

when you get the most votes but don't have to have the majority to win

arrow's theorem

3+ options being considered, a collective decision cannot be made without violating:

- unrestricted domain

- completeness

- transivity

- pareto optimality

- nondictatorship

- independence of irrelevant alternatives

vote of no confidence

can remove a prime minister

lee roberts recent vote of similar

committee markup

editing, fixing, changing a bill

roll-call vote

every person votes yay or nay on a measure

voice vote

the measure passed or it did not

gatekeepers

committee chairs - they can make or break bills

byrd rule

only budget stuff can be in the budget bills

related to Clinton's healthcare bill

median-voter rule

go towards the middle, get more votes

assumed that all are equally informed, single peaked distribution on 1 issue, and only 2 candidates

economic rent

benefit that is not erased by competition

points of entry

referendum

executive order

agency rules

the courts

executive order 9981

Harry S. Truman integrated the military via this order

election of 2000

between Al Gore and G.W. Bush

Florida fumbled the bag

electoral college allowed Bush to win even though he did not get the majority of the popular vote - electoral college!

policy analysis

the art of using evidence to persuade

red lobster

priced all you can eat crab below market price while the price was rising

social costs != private costs

a true financial disaster

marginal cost

the cost of producing one more unit of a good

when price = marginal cost, stop selling

market failure

transaction in which resources are not allocated efficiently

property right

ownership or control of physical or intellectual property

monopoly

complete control of a product or business by one person or group

collusion

somehow enter into talks with other firms to avoid competing on price

market power

when a monopoly controls the prices of things

cartel

firms that agree to collude and act like monopolies

deadweight loss

source of market failure related to noncompetitive markets

marginal sale

market price = benefit to the consumer

social marginal cost

the cost borne to society

private marginal cost

the costs born by firms

externalities

can be imposed by the consumption of a good or service

generates a negative externality: people do top much

generates a positive one: people do too little

coase theorem

can solve externalities on their own if

- relevant property rights are clear

- transaction costs are low

regulation

can limit a behavior with many externalities

pigovian tax/subsidy

a tax/subsidy that is equal to the difference between private and social marginal cost

cap-and-trade

a method for managing pollution in which a limit is placed on emissions and businesses or countries can buy and sell emissions allowances

public goods

- nonrivalrous

- nonexclusive

club goods

goods that can be shared among individuals

excludable but not rival

redistributive policies

usually shrink the overall pie of resources

govt may redistribute resources for equity at the expense of efficiency

paternalistic policies

prevent us from harming ourselves

usury

max interest that can be chaged

prescription drugs

a public good

pharmaceutical patents run for a certain amount of time, during which the original company has a monopoly

little to no incentive for making drugs for rare diseases or those that only affect poor people

mean

average

median

the center of a distribution

decile

10% of the distribution

quartile

25% of the distribution

percentiles

hundredths of the distribution

variance

how far data points lie from the mean

standard deviation: the square root of the variance

correlation

how much change in one variable mirrors change in the other

does not always equal causation

independent

outcome of one is totally unrelated to the outcome of the other

absolute figure

present in a unit of measure

relative figure

proportion of another quantity - relative to it

percentage change

(new - old)/old x 100

expected value

mean outcome from a series of events for which we know the probability of all possible outcomes and their corresponding payoffs

risk aversion

people want to make sure they're solid (will pay more for policies than will protect them from a risk)

cross-sectional data

data for a set of things at a particular time

longitudinal data

data for a set of things over time (at multiple times)

panel data

combination of cross-sectional and longitudinal data

natural experiment

circumstances almost create controlled experiment conditions

selection bias

when the process used to collect data creates a nonrepresentative sample

self-selection bias

individuals can choose whether or not they are in the group being studied or not

survivorship bias

when observations are lost or discarded before analysis is conducted, skewing the rest

positive-findings bias

when studies that find positive results are more likely to be published and consumed

good data

is needed for good policy

future value

a value that a sum will grow to with interest

present discounted value

current value extrapolated from future projections

discount rate

interest rate for present value calculations

winner takes all

someone only needs to be marginally better at something that someone else to take all of the revenue

markets

a mechanism for voluntary exchange

sellers and buyers have to agree on transaction terms - controlled by price

opportunity cost

what you must give up to get something you want

market equilibrium

where supply is equal to demand

central planning

planning carried out by a single strong government

elasticity

how much supply/demand changes in response to a change in price

price elasticity of demand

percentage change in demand with a 1 percent increase in price

price elasticity of supply

percentage change in supply with a 1 percent increase in price

inelastic

when supply/demand don't vary in response to price

creative destruction

making old things, skills obsolete

productivity

measure of outputs relative to inputs

diminishing marginal returns

the input is more expensive than the output will provide

human capital

the knowledge and skills a worker gains through education and experience

marginal product of labor

incremental output produced by 1 additional unit of labor

absolute advantage

some firm/country is better at producing something than others

comparative advantage

when an entity has the lowest opportunity cost of producing that good or service

private good

excludable, rival

for example: the physical radio

common pool good

nonexcludable but rival

for example: sound waves in a neighborhood at night

club good

excludable but not rival

for example: the satellite radio station SIRIUS XM

public good

nonrival and nonexcludable

for example: the public WUNC radio station