policy analysis

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


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


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.


EQUITY

Fairness. May imply a more equal distribution of income and wealth.


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.


STABILITY

A condition in which output is steady or growing, with low inflation, and full employment of resources.


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.


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.


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


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


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)


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


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.


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;



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;



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


2. Goal/objective setting.


3. Framework/hypothesis.


4. Determination of evaluation criteria.


5. Identification of alternatives.


6. Evaluation of alternatives.


7. Comparison of alternatives.


8. Assessment of outcomes.


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

policy analysis

Documents

policy lindblom

policy goals

jobs policy analysis

judging policy outcomesexample

judging policy outcomesit

tax structure

proposed excise tax

tax base