Public Policy Study Guide Flashcards

Flashcards for reviewing key vocabulary from Public Policy Study Guide Midterm 3.

Direct Regulation (Command and Control)

Government-imposed standards, targets, process requirements, or outright bans on activities causing externalities.

Financial Incentives (Tax and Cap & Trade)

Create incentives to induce people and companies to change their behavior.

Coasian Bargaining

Assign property rights to particular agents and allow bargaining, thereby creating a market in which property rights can be allocated to the highest used values.

Marginal Social Costs and Benefits

Represents the total benefit to society from consuming one additional unit of good or service, including both private and external benefits.

Marginal Social Cost

Represents the total cost to society from producing one additional unit, including both private and external.

Marginal Private Costs and Benefits

Additional costs and benefits incurred by a firm or consumer when producing or consuming one more unit of a good or service.

Marginal External Costs and Benefits

Additional costs or benefits to society, beyond those born by the producer or consumer, that arise from the production or consumption of a good or service.

Efficiency

When markets fail, some intervention (government) is warranted, leading to increased efficiency.

Internalizing the Externality

When the tax equals cost per unit of output, then all social costs are accounted for.

Market Failure from Negative Externality

Social Costs = Private Costs + External Costs

Law of Demand

As the price of a product increases, the quantity demanded decreases, and as the price decreases, the quantity demanded increases, all else being equal.

Pigouvian Taxes

Pollution taxes that increase private costs so they reflect social cost.

Inflation Reduction Act (IRA)

US law passed by congress in 2022 with goals of reduce federal budget deficit, lower prescription drug prices, invest in domestic energy production and clean energy, focusing on climate change

Cap and Trade

Market-based system used to reduce pollution by setting a limit on total emissions and allowing companies to buy and sell permits to emit a certain amount.

Auctioning Permits

Companies must buy permits in an open bidding process.

Free Allocation (Giving Away Permits)

The government distributes permits for free, often based on past emissions or industry lobbying.

Coase and Common Access Resources

The problem with common access resources is that nobody owns (or everyone has access to them) so nobody has an incentive to maintain their productivity

Coasian Bargain

Strengthen property rights and then let affected parties bargain.

Policy tools for the provision of public goods

Direct provision by the public sector is most effective.

Importance of evidence in informing policy

Legislature and most state agencies have little scientific expertise and must rely on outside sources for information.

Good Lobbying

Source of information/data for staff and representatives.

Bad Lobbying

The data analysis problems provided by special interest groups tend to be in favor of their preferred policies

Separation of Powers

A fundamental principle of governance where the functions of government are divided among separate and independent branches to prevent any one branch from becoming too dominant or tyrannical.

Lower costs of information (and misinformation) on social media

much lower cost of disseminating mis-information, traditional role of media as a gatekeeper gone

Alternative facts

People are entitled to their own opinion but not to their own facts, fact is fact. But now it is seemingly OK to come up with alternative facts and reality

Correlation

Two phenomena seem to be related

Causality

One phenomena causes another

Efficiency

Do benefits exceed the costs?

Equity

Are the outcomes fair?

Political feasibility

Can decision makers support the proposed actions?

Experiments to determine if a treatment works

Experiments to determine if a “treatment” works require that the treated group and the untreated group are identical except for one group receiving the treatment.

Ceteris paribus

everything is equal

Benefits of Early Childhood Education Programs

Challenges the cycle of poverty

Net benefits

Benefits minus cost

Benefit-cost ratio

Measures the level of benefits per dollar of cost