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Policy Analysis
byCYRILL SANTOS CONSUELO, RN, MAN
EDELMIRA S. BAJACAN, RN, MANPhD in Nursing Administration Students
Our Lady of Fatima UniversityGraduate SchoolJanuary 9, 2011
“We are solving economic problems politically.”
Sec. Cito LorenzoPresidential Adviser for One Million Jobs
Policy Analysis: Historical Trivia
1st used by Charles Lindblom in 1958;A type of quantitative analysis involving
incremental comparisons in which qualitative methods are included in recognition of values and policy;
Lindblom (1959) wrote of government as the “science of muddling through”
Policy Analysis: Other Definitions
Use of reason and evidence to choose course of action to attain a given set of goals/objectives;
A body of concepts and principles aimed at helping the decision maker make choices intelligently, ethically and effectively.
Analyzes existing practices/policies for effectiveness.
What is a policy?A policy is a course of action or inaction
chosen by public authorities to address a given problem or interrelated set of problems.
Source: Leslie Pal, Beyond Policy Analysis: Public Issue Management in Turbulent Times, 2nd edition (Scarborough, ON: Nelson, 1997)
What Policy Analysis is not Is not an exact science Is not infallible Is not a tool for advocacy of views of
the analyst
Dimensions of Policy
Social
Legal
Political
Economic
POLICY
FRAMEWORK
Policy Analysis
Theoretical Basis
Process Tools
• Economic• Political
• Formulation• Implementation• Evaluation
• Quantitative
Dimensions of Policy
Legal Bill proposes to lift the Cabotage Law by
amending the Tariff and Customs Code of the Philippines to allow foreign vessels to operate domestically
There is a need to amend the Constitution (Art. XII Sec. 11 – stipulates maximum 40% foreign equity in domestic shipping)
Inter-Island Shipping Bill
Dimensions of Policy
Economic Increased competition to lower transport cost and
improve quality of service (foreign vs. local) Global competitiveness, countryside development
vs. domestic shipping industry
Political Lifting the Cabotage Law is not a politically viable
option (strong pressure from domestic shipping industry)
Inter-Island Shipping Bill
Approaches in Policy AnalysisBasic Analysis
a subset of policy analysis methods comprising quickly applied but theoretically sound ways to aid in making policy decisions
Policy Research a subset of policy analysis methods
requiring substantial budget, time and data to achieve results
Elements of Policy AnalysisPolicy Analysis
Formulation Implementation Evaluation
1. What should be our goals?
2. Which option or option mix promises fewest negatives and greatest benefits?
3. What is the problem?
1. Is the policy politically viable?
2. What variables are available to help ensure the successful implementation of the policy?
1. By what criteria can be policy be judged fair? Judged good?
Relationship of Policy Analysis/Review and Policy Formulation
NEW POLICY
Policy Formulation Problem Identification
and Analysis Policy Proposal
Policy Implementation Policy Adoption Program Operation
Policy Evaluation
EXISTING POLICY
Policy Analysis/
Review
Policy Reform
Policy Implementation
Players in the Policy-Making ProcessPolicy-makers (executive, legislative
and regulatory)Policy Advocates (individual, business
entities, special interest groups)Affected Parties (consumers/general
public)Media
Criteria for JudgingPolicy Outcomes
Efficiency Equity Growth Stability
EFFICIENCY
Allocative efficiency. An efficient economy is one that produces what people want and does so at the least possible cost.
Criteria for JudgingPolicy Outcomes
EQUITY
Fairness. May imply a more equal distribution of income and wealth.
Criteria for JudgingPolicy Outcomes
GROWTH
Economic growth is an increase in the total output of an economy brought about by devising new and better ways of producing goods and services.
Criteria for JudgingPolicy Outcomes
STABILITY
A condition in which output is steady or growing, with low inflation, and full employment of resources.
Criteria for JudgingPolicy Outcomes
EXAMPLE:
Economic Evaluation of the Proposed Excise Tax on Light Commercial Vehicles (Carandang, 1997)
Tax structure on automobiles are based on engine displacements.
However, small cars (1300 cc) and LCVs with seating capacity of less than 10 are subjected to an excise tax.
A proposal was considered to subject LCVs with more than 9 seating capacity to a flat rate of 15% regardless of engine displacement and type of fuel used.
Criteria for JudgingPolicy Outcomes
It is intended to close the gap between utility vehicles (which are not subjected to excise tax) and low-priced cars (which are subjected to excise tax).
It is also intended to simplify the tax structure and encourage the broadening of the tax base.
Criteria for JudgingPolicy Outcomes
Evaluation focused on: Efficiency
Effect on gov’t tax collection target of P1.1 billion Equity
Welfare cost Growth
Impact of the 15% excise on LCV sales Stability
Inter-dependence effects of the 15% excise tax on the macro-economy
Criteria for JudgingPolicy Outcomes
Methodology: Efficiency
Regression Model (for forecasting tax collection) If Forecasted Tax Value is greater than the Target Tax
Collection, the tax policy is “efficient”
Equity Consumer Surplus Analysis using price elasticities (to
derive the ‘excise burden of tax” or “deadweight loss”) Excise burden of tax is defined as “a loss of welfare above
and beyond the tax revenues collected” Rule of thumb: Welfare cost must not exceed 5% of the
government revenue gain
Criteria for JudgingPolicy Outcomes
Methodology: Growth
Regression Model (for forecasting LCV sales)
Stability Input-Output Analysis (for establishing backward and
forward linkages and quantifying impact of changes on the final output)
Criteria for JudgingPolicy Outcomes
Results: Efficiency
Target Tax Collection of P1.1 billion will not likely to be met (Forecasted Tax Value is only P930 million)
The tax policy is “inefficient”
Equity Excess burden of tax (9.5%) is greater than the 5% rule of
thumb
Criteria for JudgingPolicy Outcomes
Results: Growth
Based on the forecast, LCV sales will decline by 6.1% with the implementation of the tax policy.
Stability Based on I-O Analysis, the economy stands to lose P1.185
billion worth of goods and services being provided by the other sectors forwardly and backwardly linked to the automotive industry if the tax policy is implemented.
Recommendation: Government should not implement the proposed
excise tax on LCVs.
Criteria for JudgingPolicy Outcomes
Example of Possible Options to an Identified Policy Problem
Problem: Environmental costs of logging are not shouldered by loggers
Options:1. Class lawsuit against loggers for damage due to
erosion and flooding;
2. Increase taxes and fees paid by loggers;
3. Reforestation tax paid directly to local governments for funding commercial reforestation;
4. Transfer the residence of the logger where he will be the first to suffer from erosion and floods;
Example of Possible Options to an Identified Policy Problem
Problem: Environmental costs of logging are not shouldered by loggers
Options:5. Levy a license fee that will be deposited in a
trust fund, the annual proceeds from which will subsidize the cost of fertilizers to make up for loss of topsoil;
6. Give local communities suffering from negative environmental consequences of logging a share in the ownership of the logging firm;
7. Use timber tax to fund researches for developing methods for quantifying the liabilities and compensatory fees from loggers;
Example of Possible Options to an Identified Policy Problem
Problem: Environmental costs of logging are not shouldered by loggers
Options:8. Give negatively affected communities the first
priority for employment by logging firms;
9. Deputize negatively-affected local communities as watchdogs over loggers.
Policy Analysis / Development Model /
Framework
Policy Recommendation
Data Analysis
Policy Issue/ Analysis
Policy Antecedent
PerformanceData
“The Key to Successful Policy/Formulation is the definition of objectives yet… there is nothing resembling agreement on this central issue, either in terms of ends or means.” Peter de Leon (1987)
Job of Policy Analysts (Nelson, 1991)
Persuade decision makers not by
asking them to trust your professional
authority but by:
• the ability to draw convincing historical analogies;
• taking diverse events and integrate them into a big picture
cont. Job of Policy Analysts
• showing that policy proposals make sense political, moral, legal, philosophical and other perspectives;
• finding simple statistics and data that make a point; and
• Convert broad policy principles into feasible short-term measures that over time will serve to implement these principles
Practical Principles for Policy Analysts
1. Learn to focus quickly on the central decision criteria of the problem.
2. Avoid the tool box approach to analyzing policy.
3. Learn to deal with uncertainty.4. Say it with numbers and/or figures.5. Make the analysis simple and
transparent.
cont. Practical Principles for Policy Analysts
6. Check the facts.
7. Learn to advocate the position of others.
8. Give client analysis, not decisions;
9. Push boundaries beyond of analysis beyond
policy envelope;
10. Be aware that there is no such thing as an
absolutely correct, rational and complete
analysis.
Stages of Policy Analysis Process
1. Problem definition
Stages of Policy Analysis Process
2. Goal/objective setting.
Stages of Policy Analysis Process
3. Framework/hypothesis.
Stages of Policy Analysis Process
4. Determination of evaluation criteria.
Stages of Policy Analysis Process
5. Identification of alternatives.
Stages of Policy Analysis Process
6. Evaluation of alternatives.
Stages of Policy Analysis Process
7. Comparison of alternatives.
Stages of Policy Analysis Process
8. Assessment of outcomes.
Stages of Policy Analysis Process
1. Problem definition;2. Goal/objective setting;3. Framework/hypothesis;4. Determination of evaluation criteria;5. Identification of alternatives;6. Evaluation of alternatives;7. Comparison of alternatives8. Assessment of outcomes
Rules to Help Select Methods of Analysis
1. Be guided by what your client wants to know.
2. Time you have been given to do the analysis.
3. Knowledge of factors affecting the policy decision.
4. Complexity of the issue
cont. Rules to Help Select Methods of Analysis
5. Data that is available.
6. Do you need a position or actual
numbers or both?
Goal: DefinitionAn object or end that one strives to
attain; aim
Objective: DefinitionSomething aimed at or striven for
THANK YOU AND GOOD DAY!
“Ask not what your country will do for you.
Ask what you can do for your country”.
-John F. Kennedy
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