Session 1A: Public Policy Overview PDF

Session 1A Overview of Public Policy Prof Govinda Bhattacharjee 1  Overview of Public Policy: Session Structure Nature and scope of public policy Public policy process Paradigms and models of public policy and po...

Session 1A Overview of Public Policy Prof Govinda Bhattacharjee 1  Overview of Public Policy: Session Structure Nature and scope of public policy Public policy process Paradigms and models of public policy and policy design Law of unintended consequences in public policy Behavioural Economics and Public Policy 2  We The People WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among them all FRATERNITY, assuring the dignity of the individual and the unity and integrity of the Nation; In Our Constituent Assembly this twenty-sixth day of November, 1949, do Hereby Adopt, Enact And Give To Ourselves This Constitution. 3 4  Public or Social Goods A social good or common good, or public good is something that benefits the largest number of people in the largest possible way. Clean air, clean water, healthcare, education Police service, fire brigade, national defense, public transport, roads, dams and bridges Private Goods: Clothes, cosmetics, footwear, cars, electronic products, food It is a state’s primary duty to provide public goods either free or at an affordable cost. Once produced, they can be consumed by another individual at no or little additional cost – consumption by one does not decrease its availability for others - Non-Rivalrous. They are also Non-Excludable – consumption by one does not result in excluding others like the private goods. Cost of social goods will be covered by taxes, and made available to people, if necessary with some redistribution through subsidy etc. to ensure equity. For allocation of social goods a political process is necessary. Government’s job is to maximise social welfare. Government is also responsible for maintaining macro-economic stability. 5  Public Policy What is Policy? Public policy is too complex to be reduced to a single definition, hence scholars refuse to define it. Public policy is by and large a context-driven phenomenon. Given the contextual root, there cannot be universal definition. Generally, it is about the delivery of public goods and services. David Easton (1965) defined policy as the “output” of the political system, and “public policy” as “the authoritative allocation of values for the whole society”. Reflects societies most important values and also the conflicts among them. Public policy is not made in a vacuum. It is also influenced by the cultural mores and norms in a society and the structure of government. Also, “There is no such thing as a fixed policy, because policy like all entities is always in the making” (Lord Salisbury) “Public policy is whatever governments choose to do or not to do. Governments do many things – they regulate conflict in a society; they organise society to carry on conflict with other societies; they distribute a great variety of symbolic rewards and material services to members of society; they extract money from society, most often in the form of taxes. Thus public policies may regulate behaviour, organise bureaucracies, distribute benefits or extract taxes – or all these things at once.” –Thomas Dye 6 7  Policy and Goal Policy is purposive and deliberately formulated with purpose or a goal to be achieved within a definite time frame. It does not emerge at random or by chance. Once a goal is decided, policy is devised in such a way that it determines the course of action needed to achieve that goal. Policies are distinct from goals and can be distinguished from the latter as means from ends. Goals and objectives depend on the values of the policy-makers/ society. Goals and Action Values Objectives Policies Directives Programmes  Problem Identification & Issue Framing How problems are framed or defined is strongly related to the potential policy responses. The goal should be a good match between problem definition and policy response. However, in the real-world, many serious problems do not get any policy attention. Policy responses often do not address the problem. Politicians often define problems in particular ways for their political gain. Finally, it is also the case that policies sometimes require the creation of a problem. Obesity: What is the issue? Gun violence in US: What is the issue? Old Age: What is the issue? Mumbai floods: What is the issue? Kolkata protests: What is the issue? A social problem can be framed or defined in many different ways. Different problems compete for attention and priority of policymakers. Data and evidence here must play a role. But all problem definitions include some value judgment about what's good and bad for society, and what government ought to do or not do through policy.  Paradigms of Public Policy -I Public Policy is always about politics, which is an area of contestation, bargaining and negotiation. Incrementalist Paradigm (political science approach to public policy): How government policies are made and implemented in small incremental steps. To avoid unanticipated consequences, a safer way is to proceeds through a succession of incremental changes, also to avoid serious lasting mistakes in several ways. Existing policies have sunk costs which discourage innovation, incrementalism is an easier approach than rationalism, and the policies are more politically expedient because they don't necessitate any radical redistribution of values, hence have better chances of acceptability. 11  Paradigms of Public Policy -II Rationalist Paradigm (Public administration approach to public policy) Rationalism is about knowledge and objectivity, hence the rationalist approach to public policy is informed by available knowledge. It is about choosing the most efficient option among several possible alternatives in terms of their respective social costs and social benefits. A rationalist model tries to understand all the alternatives, take into account all their consequences, and select the best. Rationalism tries to satisfy Pareto Optimality. Rationalist model advocates the need to bring about changes in personnel (experts), structures and processes (systematic thinking and integrating expert knowledge in policy making) as well as in the general environment of policy making. Techniques such as PERT, CPM, OR techniques like linear programming are often applied. 12  Models of Public Policy -I Elite-Mass Model: Public policy reflects the values and preferences of the governing elite supposedly to promote the welfare of the masses (Planning Commission). Mostly prefer status quo to radical changes. Changes will be necessarily incremental with minimal disruption or dislocation of the system. “Society is divided into the few who have power and the many who do not have. Only small number persons allocate values for society; the masses do not decide public policy. Public policy does not reflect demands of the masses but rather the prevailing values of the elite.” (Dye 2004) “In all societies, from the meagerly developed and to the most advanced and powerful ones, two classes of people exist, a class that rules and a class that is ruled. The first class, always the less numerous, performs all political functions, monopolises power and enjoys the advantages that power brings, whereas the second, the more numerous class is directed and controlled by the first, in a manner that is more or less legal or arbitrary and legitimises the first. Ruling class makes policies in its own interests, couched in a moral and legal garb.” (Gaetano Mosca, “The Ruling Class”, 1939) 13  Models of Public Policy - II Group Model: Public policy is the product of the group struggle. Politics being a struggle between competing groups, most public policies reflect the interests of some groups. Competition among the groups determines the allocation of resources and distribution of rewards. (Identity Politics) Changing supremacy of groups determines the locus of political power in society. “What may be called public policy is actually the equilibrium reached in the group struggle at any given moment, and it represents a balance which the contending factions or groups constantly strive to tip in their favour…the legislature referees the group struggle, ratifies the victories of the successful coalition, and records the terms of the surrenders, compromises, and conquests in the form of statutes”. (Earl Latham) Institutional Model: Power is central to politics. Power is exercised through institutions, rules and bureaucracy. The model deals with organization of government: arrangements of ministries and departments, constitutional provisions, law and judicial decisions. Its important elements are political parties, interest / lobby groups, public opinion. Government lends legitimacy to policies, they are then legal; Government extends policies universally to cover all people in society; Government monopolizes the power to coerce obedience to policy, or to sanction violators. 14 15  Models of Public Policy - IV Multiple Streams Framework Model Stream Implication Problems Problem is defined on the basis of values (liberal/ conservative), comparison (US Vs China) and categories (civil rights, delivery of good/ services, special provision for some groups) Politics Involvement and participation (or otherwise) of all stakeholders to build consensus (GST/ Farm Laws) Policies Identifying ideas/ solutions that are technically feasible, socially acceptable and perceived to be free from future constraints like budget limitations. Advocacy Coalition Framework: (Sabatier, 1988 and Jenkins-Smith, 1993): It focuses on the interactions of advocacy coalitions – each consisting of actors from a variety of institutions that share a set of policy beliefs within a policy sub-system. 16  Lokpal and Lokayuktas Act Influencers/ Triggers First introduced in Parliament in 1968. But The immediate trigger was the exposure of a series of big-ticket scams in the media during 2009-10: 2G Scam, Commonwealth Games, Coal, Adarsh Housing Society, Black money, CAG reports on 2G, Coal scams, etc. Strategies The IAC cashed in on the public anger against the political class and used the Gandhian methods of fasting to mobilise public opinion. Dharna at Ramlila Ground, SMS campaigns, Use of RTI to expose corruption, Rallies, Anna’s fast Geographical spread Mostly focussed on Delhi’s Ramlila Ground and Jantar Mantar, but supported all over the country – Bangalore, Mumbai and other cities; even outside India, there were protests in NYC and London. 17  Lokpal and Lokayaktas Act Concluded Role of Media Carefully crafted campaign by IAC against corruption, extensive media coverage and campaigns, extensive round the clock coverage by Aj Tak and Star TV, CNN-IBN and NDTV of Anna’s fast; extensive use of social media and signature campaigns. Theoretical Framework Combination of Advocacy Coalition Framework and Multiple Streams Sustained advocacy campaign by Advocacy groups and NGOs through the media: IAC Three Streams (Problem-Policy – Politics) Problem was identified as corruption A Policy Solution was proposed through consensus among all Politics was used to push for policy change 18  Toolkits of Public Policy intervention Limited in number and scope Coercion to modify behaviour Taxation Subsidies Use budgetary resources to produce public services Spend on infrastructure Law of Unintended Consequences Paternalism The idea that the state understands the needs and desires of populace better than themselves and seeks to do what is good for them. In the process it makes someone happy at the cost of the other. Key for success A market failure is present The right intervention was chosen The implementation was sincere. 19  Why things go wrong Information constraint Administrative constraint Imperfect data Role of a leader Information constraint hamper Inefficiency in spending, corruption paternalism Principal agent problem: Employees/ Knowledge constraint bureaucracy care more about their own Lack of research to back political interests rather than of the state/ public decisions Voter rationality constraint Resource constraint Incentives work well Inadequacy of taxes To judge a policy by its popularity High compliance cost among voters (Populism) may be disastrous for economy (farm loan Wrong priorities waivers, freebies) Bailing out failed banks, airlines 20  Law of Unintended Consequences People respond to incentives Rat problem in Hanoi, 1902 Railway on cost per Km in USA Amsterdam tax on house based on width UGC publications Predatory journals Prohibition Laws in Bihar A short termism is wired into us, we tend to take decisions in the short rather than long term High powered incentives may nudge people to pursue incentives to the exclusion of everything else, leading to unintended consequences 21  Which Policies Have better Chances of Success? Lok Pal Bill was introduced in Parliament in 1968 and was enacted in 2013; On 16th December 2012 the nation was convulsed with protests in the wake of a brutal rape. On 2nd April 2012, after 3 months and 7 days, a law was enacted that revised the punishment on sexual offences, broadened the scope of sex crimes and brought about other far reaching changes in public life. Ujjala Scheme was a grand success. Farm Bills on allowing marketing of agricultural products outside the Mandis which were progressive and had the potential of a game changer had to be rolled back. 22  Framework of Successful Policy Carbon tax, Clean energy laws Benefits Diffused Concentrated Diffused Costs, Diffused Politicians can get the Diffused Benefits credit without having to shoulder the blame, since Ujjala the costs to any single Costs taxpayer are hardly Concentrated noticeable Politicians get little credit Concentrated Costs, Reservation while risking the loss of Concentrated Benefits support from those hurt by the policy Farm Laws 23 24  Use of Behavioural Economics for Good Public Policy Design Context effect: In situations where people do not have a good idea of how to value objects, they use information from the context to help them make that judgment. Inertia: Why are organ donation consent rates really low in countries like Canada and the United States? Why are they extremely high in some other countries, like France and Austria? In Canada, organ donation rates are about 2.5%. In Austria, they're close to 99%. Essentially, the default assumption is different in Canada versus Austria, and defaults play a huge role in shaping decision-making. If you want to engage people in a certain outcome, make that outcome easy. Conversely, if you were to prohibit people from engaging in that outcome, impose a simple transaction cost or simple obstacle, and they will not do that outcome. To encourage savings, making putting money in easier, taking out a little costly. Defaults also signal something about everybody else. For example, if everybody else is donating organs-- if that's the default—perhaps I should donate organs, as well, because that's the right thing to do. Equity in distributing benefits in society: Ultimatum game 25  Level of Influence Nudge uses the power of the “social norm” as most people want to behave or be seen to behave in congruity with these norms. Social norms can be created, just like social trust. Laissez faire Nudge Incentivise Mandate Aadhar Jan-Dhan Yojana Bati Bachao Beti Padao Swacch Bharat Taxes on Tobacco Prohibition Behavioural Toolbox 27 28 Buy Two Get 50% Off 29 Herd Mentality 30  Chicago Lake Shore Drive Social Control 31  Behavioural Toolkits Loss Aversion produces inertia Power of “Free” Herd Mentality Social Controls Peak-End Rule Framing: Presentation of Choice Choice Paradox Reward Obsession Anchoring: Reliance on the first piece of information Mental Accounting 32 Thank You 33