Policy A nalysis Techniques a kick-starter

Policy analysis is more art than science. It is about decision-making about future action in the absence of full information. We need all the help we can get. Here are some techniques to help structure and test our thinking1. Practice using them try analysing the front-page story on the daily newspaper instead of doing the Suduko puzzle!

Part 1: The Facts Not in Contention assembling the information

Note this is not sequential, but an iterative process.

1. Define the Problem

Goldberg rule: Dont ask whats the problem, ask whats the story? That way youll find out what the problem really is. The customer is always right and often wrong Is there a problem? o There is a problem o People think there is a problem (which is the problem) Ask questions: Why, Why?, Why?, So what? Think in terms of deficit and excess o Too many, too small, growing too slowly or too fast (implying they may happen in the future) Limit definition to description o Descriptions that diagnose the cause are treacherous o Avoid including an implicit solution Tell the problem to other people. If you say Aha, but thats not the real problem; the real problem is you still have not got there!

2. Assemble the Evidence

Distinguish between: o Data facts about the world, often statistics, but also how people act. o Information data that have meaning, so that they can help you sort the world into different logical or empirical categories. o Evidence information that affects existing beliefs of important people about significant features of the problem you are studying and how it is to be addressed. Identify what is known and seek to substantiate presumptions. Try and identify your own assumptions, too! List and classify information and seek to clarify unclear and presumed material:
Known X Unclear Y Presumed Z

Drawing on Eugene Bardach (2000) The Eightfold Path to More Effective Problem Solving; Richard Neustadt & Ernest May (1986) Thinking in Time, and Edith Stokey & Richard Zeckhauser (1978) A Primer for Policy Analysis, and also my own experience and training courses I have been on.

Jeff McNeill: Policy Analysis Techniques (2008)

Ask Journalists questions to trace and articulate the history of the issue. o When (draw a time-line) o What o Where o Who o How o Why

3. Construct the Alternatives

Start with a comprehensive list of possible alternative policy options you might wish to consider then discard obvious losers, combine and reorganise others. Always include let present trends continue undisturbed - which is not do nothing. Many trends in motion will persist and alter the problem. Simplify by distinguishing between a basic alternative and its variants. These are usually defined by different methods of implementation and financing. Invent alternatives. Alternative does not necessarily signify options are mutually exclusive.

Part II: The Facts in Contention evaluating the information 4. Select the Criteria
Values and philosophy are introduced in the evaluative standards to judge the goodness of the projected policy outcomes associated with each alternative. Evaluative criteria commonly used: o Effectiveness o Efficiency o Equality, equity, fairness, justice Evaluative criteria are not used to judge the alternatives directly, but are applied to the projected outcomes. Alternative A will very probably lead to Outcome OA, which we judge to be the best of the possible outcomes; therefore we judge Alternative A to be best. That way we can look for alternatives to A to achieve OA. Practical criteria o Legality o Political acceptability Evaluation criteria may conflict, requiring weighting of opposing values. If possible sort criteria into those that refer to: o Values to be maximised o Values that stand as constraints o Values that have more-is-better quality. Define as maximise such-and-such value; satisfy such-and-such constraint; and get more of such-and-such value.

5. Project the Outcomes

Define the expected outcomes for each alternative. Write implementation scenarios in future perfect tense (The stream will have no visible scum) Construct an outcomes matrix:

Jeff McNeill: Policy Analysis Techniques (2008)

Criteria Cleanup Minimise cost of Minimise achieved (% pollution reduced consumer time achieved) ($/tonnes) (minutes) IM 240 Baker: 100 Baker: <100 Jones: 60 Smith: 0 Smith: Thousands Smith: >60 Modified Baker: 50 Baker: thousands Jones: 75 smog check Smith: 0 Smith: Millions Smith: 75 Remote Baker: 0 Baker: Millions Consensus: 0 for sensing Smith: 100 Smith: 200 most drivers Where Bake, Smith et al. are different studies. Policy Alternatives Alternatives

Reduce test cost to vehicle owner ($) Jones: <10 Baker: >35 Smith: 35 Consensus: 0 for most owners

6. Confront the Trade-offs

You cant have your cake and eat it, too. You need to identify what extra benefits can be gained for extra expenditure and other costs. Focus on the margins: ask how much extra good we can get from an extra amount of effort. Think and speak of tradeoffs in terms of projected outcomes rather than alternatives. Simplify comparisons by benchmarking alternatives with a base case (usually do nothing different). o The worst case scenario which we have to prevent practically at any cost o Our ideal set of outcomes if political *or other+ conditions were just a bit more favourable

7. Decide!
In the end you have to choose which of the alternatives (including doing nothing different) best achieves the desired outcomes to recommend to decision-makers. Pretend you are the decision-maker, even if you are not, and decide what to do, based on your own analysis. If you cannot convince yourself of some course of action, you wont be able to convince your client! The $20 Note Test (Hey - there is a $20 note lying on the footpath, go out and get it!) o If your favourite policy alternative is such a great idea, how come its not happening already? resistance of bureaucratic and other stakeholders in the status quo lack of an entrepreneur to pick up your great idea it is not a great idea! Helicopter Test: Is the preferred option more effective, efficient and equitable than loading a helicopter with sacks full of $100 bills and emptying them out the door while flying low over the city? Bets and Odds: How many bottles (cartons) of good wine are you personally prepared to bet on the outcome of your policy choice? o Ask this question to each member, in presence of the others o Require each to specify what makes their answers different o Encourage argument and promote articulation of differences o Review presumption accordingly Alexanders Question: what fresh facts, if at hand, by when, would cause you to change your presumption/direction/decision or bet?

8. Tell Your Story

The opportunity to sell your story to your client. Consider the relationships between you and the client to identify the best way to communicate your ideas and recommendations. It
Jeff McNeill: Policy Analysis Techniques (2008)

should have good logical narrative flow. Keep it short 3 pages is good, 2 pages is better, but support it with a more comprehensive document substantiating your recommendations and explaining how you came to them. Time is money, and it takes time to read! Proctor & Gamble are supposed to have made all its decisions on one page memos, though the appendices might be 1,000 pages. The New York Taxi Driver Test You have just caught a cab and the cabbie asks what you do. Im developing an analysis for He says, Whats that? You explain you are working on the problem of You have one minute to offer a coherent downto-earth explanation before he starts accusing you of being a pointy-headed intellectual or worse. Who will use the analysis and for what purpose(s)? Is this desirable?

9. (Start Over)
Just when you thought you had finished! Things change Policy development is an iterative process.

What Governments (Can) Do

Modes of Government intervention: 1. Information: Provide information (including education, advice and advocacy) to individuals and firms to reduce information asymmetry so the market functions better. This also includes facilitating and developing networks between different groups of individuals, firms and organisations within which information on values, priorities and ideas can be exchanged. 2. Services: Government can participate directly in the market to supply goods or services the market does not provide especially public goods. 3. Incentives: Incentives increase profitability of businesses and may induce new participants in the market to provide services. 4. Economic instruments: taxes, rates and levies can modify individuals behaviour by applying financial costs for undesirable actions, and rewarding desirable ones. 5. Regulation: restrict the range or nature of activities individuals and firms can undertake without incurring penalties. 6. Persuasion: appeal to people to voluntarily change behaviour appealing to their better natures, or on moral or shame grounds. 7. Bureaucratic and political reform: change the framework within which public and private sector behaviour is constrained. 8. Do Nothing: leave solutions to issues be developed by individuals, firms and organisations. Significant voluntary collective behaviour in society is conducted without government intervention. Also, while market failure is a rationale for government intervention, government can fail, too. Sometimes the pain is less if the government does not intervene the medicine can be worse than the illness!

Jeff McNeill: Policy Analysis Techniques (2008)