PBPL Lecture 12:

Policy Analysis and Evaluation

• Definition of Policy Analysis:

  • Client-oriented advice relevant to public decisions, informed by social values

  • Be prepared for some math in class, though extensive economic modeling is minimized

Policy Analysis Cycle (Fig 7.1)

1. Identify and Define the Problem

2. Identify Alternatives

3. Evaluate Alternatives

4. Establish Evaluation Criteria

5. Select the Best Alternative

6. Monitor Outcomes

Identifying and Defining the Problem

• Not every group agrees on what constitutes a problem (e.g., regional rail issues vs. Confederate monuments)

• Effective Problem Definition Features:

  • Clearly define the issue logically

  • Define key terms

  • Include empirical evidence and identify data needed

  • Consider likely obstacles

Alternatives and Status Quo

• Identifying Alternatives:

  • Use a “blue sky” approach

  • Always include the status quo as a baseline alternative

  • Narrow the list down to 2-5 feasible options

  • Ensure clear, non-jargon alternatives

Transitioning to Analysis of Alternatives

• Establish criteria for evaluation

  • Use Cost-Benefit Analysis (CBA) for efficiency concerns

  • Multi-Attribute Analysis (MAA) for complex concerns

• Cost-Benefit Analysis (CBA):

  • Focused on efficiency and return on investment, may overlook ethical considerations

CBA Examples

• Example of Fire Engine Purchase:

  • Costs and benefit evaluations emphasize the importance of data collection

• Ice Cream Production Example:

  • Selling price vs. production costs

  • Net benefit calculation leads to a production decision

• Steel Mill Safety Devices Example:

  • Evaluates costs against the value of lives saved (considering worth)

Differences in CBA Applications

• Identify advantages and disadvantages for each alternative

• Translate those into costs and benefits to derive net benefits

Practice Scenarios

• City Park Speakers Problem:

  • Compare options based on upfront costs and projected revenue over time

• Amtrak Service Case Study:

  • Evaluate ticket and operational costs against benefits

  • Determine the best option based on net benefit calculations and benefit/cost ratios

Summary Key Points

• Familiarity with policy analysis and basic cost-benefit analysis is crucial

• Focus on applying these frameworks in practical examples