Evaluation Model Paper
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7 Policy Impact, Evaluation, and Change
When it is viewed as a cycle or sequential pattern of functional activities, the final phase of
the policy process is evaluation. As much an art as a science, policy evaluation involves the
estimation, appraisal, or assessment of a policy, its content, implementation, goal
attainment, and other effects. The policy evaluator wants to know whether and to what
extent a policy has accomplished its goals or whether it has had other effects, intended or
unintended.
Policy evaluation may also seek to identify factors that contributed to the success or
failure of a policy. This, in turn, may lead to recycling of the policy process (problem
definition, formulation, adoption, and so on) in order to continue, modify, strengthen, or
terminate the policy. Put differently, information gained through evaluation feeds back into
the ongoing policy process.
As a functional activity, evaluation can occur at any point in the policy process, not simply
after some effort has been made to implement a policy. Thus, attempts are made to
determine prospectively—to estimate or predict—the likely effects, or the costs and benefits,
of policy alternatives prior to their adoption. Typically, however, policy evaluation “looks
backward” to what has happened whereas the other stages of the policy process look
forward to attaining a goal.
Before proceeding further in examining evaluation, we need to pause and look at policy
impacts, at the general sorts of effects or consequences that may ensue from policies.
Policy Impact
To begin, we need to distinguish policy outputs and policy outcomes. Policy outputs are the
things actually done by agencies in pursuance of policy decisions and statements. The
concept of outputs focuses attention on such matters as amounts of taxes collected, miles of
highways built, welfare benefits paid, price-fixing agreements prosecuted, traffic fines
collected, or foreign-aid
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projects undertaken. Outputs usually can be readily counted, totaled, and statistically
analyzed. Examining outputs may indicate, or seem to indicate, that a lot is being done to
implement a policy. Such activity, however, sometimes amounts to nothing more than what
Professor William T. Gormley Jr. calls “bean counting.” Agencies, under pressure from
legislators, interest groups, and others to demonstrate results, “may focus on outputs, not
outcomes, in order to generate statistics that create the illusion of progress.” If the
percentage of students graduating from universities in a state increases, does this tell us
anything about the quality of education that they are receiving?
Policy outcomes (sometimes called “results”), in contrast, are the consequences for society,
intended and unintended, that stem from deliberate governmental action or inaction.
Social-welfare policies can be used to illustrate this concept. It is fairly easy to measure
welfare-policy outputs such as amounts of benefits paid, average level of benefits, and
number of people assisted. But what are the outcomes, or societal consequences, of these
actions? Do they increase personal security and contentment? Do they reduce individual
initiative? Did Aid to Families with Dependent Children, now Temporary Assistance to
Needy Families (TANF), have the effect of encouraging promiscuity and illegitimacy, or
teenage pregnancies, as some alleged? Do welfare programs help keep the poor quiescent,
as others contend? Questions such as these, which are tough to answer, direct our attention
to the societal effects of policies. Among other things, policy students should want to know
whether policies are accomplishing their intended purposes, whether society is changing as
a consequence of policy actions and not because of other factors such as private economic
decisions, and whether it is changing as intended or in other ways. Policy impacts are an
amalgam of outputs and outcomes.
The impact of a policy may have several dimensions, all of which should be taken into
account either in the conduct of a formal evaluation or in the course of an informal
appraisal of the policy. They include the following:
1. Policies affect the public problem at which they are directed and the people involved.
The target populations whom the policy is intended to affect must be defined, whether they
are the poor, small-business people, disadvantaged schoolchildren, petroleum producers, or
whoever. The intended effect of the policy must then be determined. If it is an antipoverty
program, is its purpose to raise the income of the poor, to increase their opportunities for
employment, or to change their attitudes and behavior? If some combination of such
purposes is intended, analysis becomes more complicated because priorities should be
assigned to the various intended effects. Typically, policies accomplish at least a portion of
their goals or objectives.
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Further, a policy may produce either intended or unintended (unforeseen or unplanned)
consequences, or even both. Unemployment compensation may improve the economic
situation of the unemployed, as designed by its proponents, but it may also cause them to
delay in finding new jobs. A publichousing program may improve housing conditions for
urban blacks, but it may also be so administered as to contribute to racial segregation in
housing and
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neighborhood schools. The agricultural income and price support programs, intended to
enhance farmers' incomes, also may lead to overproduction of supported commodities (only
a few such as corn, wheat, and cotton are covered), to higher food prices, and to unearned
increases in land values.
The causes of unintended policy consequences are multiple: the complexity of the issue
being addressed; insufficient information on which to ground a decision; pressure to act
quickly on a matter; too little consultation with other legislators or affected persons;
partisan pressures and the politicization of issues; and, finally, human error. Also, statutory
language needs mention. A law may be clumsily drafted, or too detailed, or too vague, and
thus permit unintended interpretations.
A good illustration of a policy with negative unintended consequences was financial
deregulation (or nonregulation). The Financial Services Modernization Act (1999) permitted
banks to combine commercial banking (deposits and loans), investment banking, and
insurance services. Huge banking conglomerates developed, some of which became viewed
as “too big to fail” because of their potential effects on the economy. The Commodity Futures
Modernization Act (2000), which was slipped into a huge omnibus appropriations bill and
enacted with no debate, prohibited regulation of credit default swaps (don't ask) and other
financial derivatives. These statutes, and decisions by regulatory officials not to use the
authority they did possess, because of a belief in self-regulating markets, contributed greatly
to the near financial collapse of the American economy and the Great Recession.
2. Policies may affect situations or groups other than those at which they are directed.
These are variously called third-party effects, spillover effects, or externalities. The
construction of urban interstate highways is of much benefit to motorists and trucking
companies. However, they also cause inconvenience, disorder, and social disruption for the
neighborhoods through which they run, and they have helped produce urban sprawl. Clear-
cutting in national forests, which is of benefit to timber companies and in line with the
perspective of those who view forests as tree farms, is profoundly disturbing to
environmentalists, nature lovers, and many sportsmen and women because it results in the
destruction of wildlife habitat, the loss of aesthetic value, and the siltation of trout streams.
These two examples portray negative externalities, but externalities may also be positive.
Public-education programs not only educate students but also provide employers with a
more capable workforce and the community with better-informed citizens. A strong line of
research supports a correlation between education and support for democracy. Those who
contend that only those who have children in public schools should contribute toward their
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support ignore such positive externalities. Although pollution-control programs impose
costs on many industries, they are a boon to the manufacturers of pollution-control
equipment. Many of the outcomes of public policies can be most meaningfully understood
as externalities that impose costs or provide benefits for third parties.
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3. Policies have consequences for future as well as current conditions; for some policies
most of their benefits or some of their costs may occur in the far future. Was the Head Start
program—a preschool education program for the poor—supposed to improve participating
children's short-term cognitive abilities or their long-range development and earning
capacity? Did regulation of the field price of natural gas, a policy initiated in the 1950s and
extending into the 1980s, really produce a shortage of gas in the 1970s, as some contended
(notably petroleum-industry officials and their supporters, who had long been critics of
price regulation)? Are we better off under deregulation?
The future effects of some policies may be very diffuse or uncertain. Assuming that patent
and copyright policies do indeed stimulate invention and creativity, and that these activities
in turn enhance economic growth and societal development, how does one measure their
benefits, either qualitatively or quantitatively? Again, how does one appraise (with
reasonable objectivity) the effects of the National Foundation on the Arts and the
Humanities' support for literacy, artistic, and museum activities? Would the elimination of
such policies as these have deleterious consequences for American society?
4. Just as policies have positive effects or benefits, they also entail costs. Economists seem
never to tire of telling us that there is no such thing as a free lunch. Costs come in different
forms. First, there are the direct costs for the governmental implementation of a policy or
program. These are usually fairly easy to calculate, whether stated as the actual amount of
money spent on the program, its share of total governmental expenditures, or the
proportion of the gross domestic product devoted to it. Budgeting documents will yield such
figures. If, however, a governmental expenditure serves multiple purposes, such as
operating the space program and developing new technology, the allocation of costs
becomes more perplexing.
Direct costs also include private expenditures that are necessary in order to comply with
public policies, such as those for industrial health and safety and environmental-pollution
controls. These may be more difficult to discover or calculate. Moreover, it is possible that
some companies would have installed protective devices in the absence of policy, whether
out of a desire to serve the public interest or to protect themselves from lawsuits. Should
their costs then be assigned to the policy? In the absence of governmental subsidies, the
direct costs of complying with regulatory policies initially fall primarily on the regulated,
who have an ideological incentive to inflate claimed costs, deliberately making the policies
appear more burdensome. Ultimately, of course, most compliance costs are likely to be
shifted to consumers in the form of higher prices for goods and services.
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This brings us to indirect costs. Public policies may cause reduced production, higher
prices, or mental anguish or distress. Expenditures to meet coal-mine-safety requirements
may cause a reduction in mine output. People called for jury services typically receive
compensation that does no more than cover commuting costs. The consequence is lost
wages, or lost production, or both. Many public policies have indirect or social costs of these
sorts. Mental
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anguish may occur when one's hometown is flooded by a new impoundment. Financial
compensation may be paid for one's childhood home, but what of the loss that occurs
because, being under twenty feet of water, it can no longer be visited? The concept of
indirect cost often calls for putting a price tag on intangibles. They tend to defy precise
measurement.
Finally, there are opportunity costs, a concept that rests upon the fact that we cannot do
everything at once and that resources used for one purpose (e.g., flood control) cannot be
used for another purpose (e.g., public housing). “Opportunity cost is a decision making
rather than an accounting concept.” It focuses attention on what one has to give up (or,
alternatively, what one will gain) if resources are used for one purpose rather than another.
Thus, economists argue that the United States' all-volunteer army will not attract needed
recruits if the opportunity costs of military service are kept below those of civilian life.
When the ranks of the military were largely filled by draftees, less concern had to be given
to opportunity costs and the compensation of service personnel.
5. The effects of policies and programs may be either material (tangible) or symbolic
(intangible). The consequences of symbols are both important and hard to measure.
Symbolic outputs, according to political scientists Gabriel A. Almond and G. Bingham Powell
include “affirmations of values by elites; displays of flags, troops, and military ceremony;
visits by royalty or high officials; and statements of policy or intent by political leaders.”
Consequently, they “are highly dependent on tapping popular beliefs, attitudes, and
aspirations for their effectiveness.”
Symbolic policy outputs produce no readily discernible changes in societal conditions. No
one eats better because of a Memorial Day parade or a stirring speech by a high public
official on the virtues of free enterprise, however ideologically or emotionally satisfying
such actions may be for many people. More to the point, however, policy actions ostensibly
directed toward meeting material wants or needs may turn out in practice to be more
symbolic than material in their effect.
This shift in policy tone is well illustrated by the Fair Housing Act of 1968. Enacted by
Congress in part because of pressure created by the assassination of Dr. Martin Luther King
Jr., the 1968 law prohibited discrimination in the rental or sale of housing because of race,
color, religion, sex, or national origin. However, the Department of Housing and Urban
Development (HUD), which was assigned primary responsibility for its enforcement, was
authorized only to mediate disputes between a person who thought he or she had been
discriminated against and the renter or seller. The Justice Department, in turn, could not act
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unless it found a “pattern or practice” of discrimination. As a consequence of these weak
enforcement provisions, the Fair Housing Act in practice did not live up to its promise. The
act, which one member of Congress called a “toothless tiger,” was of little use in preventing
discrimination in housing.
The Congress in 1988 reached a compromise agreement on legislation to strengthen
enforcement of the Fair Housing Act. Now a person who believes he
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or she has been discriminated against can file a complaint with HUD, which, if it cannot
settle the dispute, can issue a charge of housing discrimination. At this point either party to
the dispute can choose to have it decided by either a federal district court or an
administrative hearing. If either party chooses to go to the federal court, that choice
prevails. This procedure was intended to put some real “teeth” into the enforcement of the
act and give it material rather than merely symbolic effect. It has been partially successful,
but complaints have been far fewer than actual incidents of discrimination.
Studies indicate that presidential level support for fair housing has varied from Johnson to
Obama. So have enforcement actions by federal, state, and local agencies. Though some
forms of discrimination have lessened, overall housing discrimination remains a problem in
many cities and suburbs. Housing segregation and discrimination contribute to other
problems—for example, segregated schools, limited job opportunities, and exposure to high
crime rates in minority areas.
Other public policies that appear to promise more symbolically than their implementation
yields in material benefits include antitrust activity (especially as that involves “trust
busting”), public-utility rate regulation, and equal employment opportunity. Even though
the actual effect of a policy may be considerably less than is intended or desired, it
nonetheless may have significant consequences for society. An antipoverty program that
falls short of its mark may provide some assurance to people that the government cares
about poor people and wants to reduce poverty. Legislation on equal employment
opportunity informs people that their government, officially at least, does not condone
discrimination in hiring on the basis of race, sex, or nationality. Apart from the effects such
policies have on societal conditions, they may contribute to the maintenance of social order,
support for government, and personal self-esteem, which are not inconsequential
considerations.
The analysis and evaluation of public policy is usually focused upon what governments
actually do, why, and with what material effects. We should not, however, neglect the
symbolic aspects of government, despite their intangible and nebulous nature. The rhetoric
of government—what governments say, or appear to say—is clearly a necessary and proper
subject for the policy analyst.
Policy Evaluation
Policy evaluation, as a functional activity, is as old as policy itself. Legislators,
administrators, judges, pressure-group officials, media commentators, and citizens have
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always made judgments about the worth or effects of particular policies, programs, and
projects.
The Boston Tea Party, for instance, is often portrayed as an unfavorable evaluation of one
of King George's colonial tax policies. In actuality, those most threatened were colonial
merchants who sold tea smuggled into the country and enjoyed large profits. They were the
organizers of the Tea Party, not consumers.
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Many policy judgments have been of an impressionistic or intuitive variety, based at best
on anecdotal or fragmentary evidence, and strongly influenced by ideological, partisan, or
idiosyncratic valuational criteria. Thus, staunch conservatives may regard public-housing
programs as socialistic and in need of repeal, regardless of their causes, necessity, or
consequences; or Democrats may support higher taxes on corporations and the rich because
they believe this will enhance their electoral opportunities. Unemployment compensation
may be deemed a “bad” program because the evaluator claims to know “a lot of people”
who improperly receive benefits.
Apocryphal stories about “welfare queens” who drive Cadillacs to collect their welfare
checks are commonplace among welfare critics. Most of us are familiar with this style of
policy evaluation and have perhaps enjoyed doing a bit of it ourselves. Much conflict results
from this sort of evaluation, however, because different evaluators, depending upon their
values or criteria, may reach sharply divergent conclusions on the merits of the same policy.
The food stamp program is a recent example of this.
Another form of policy evaluation centers on process, on the operation or administration
of a policy or program. Although the terms policy and program are often used
interchangeably, a line can be drawn between them. Policy is defined in this book as a
course of action followed by government in dealing with some problem or matter of
concern. A policy may spawn a variety of programs, a program being defined as a set of
rules, routines, and resources intended to carry out a policy or a portion thereof. Programs,
which give “direct, specific, and concrete expression” to the policies on which they are
based, sometimes are marked out in legislation. More likely, however, they will be the
handiwork of administrative officials. Thus, the Antitrust Division has created several
programs to enforce the antitrust laws, such as the competition advocacy and anti-cartel
enforcement programs.
A program, or several programs, conceivably could be eliminated without impairment of
the underlying policy. In 2003, the Bush administration proposed eliminating several fairly
specifically focused education programs because they were deemed unnecessary,
duplicatory, or replaceable. However, the broad, underlying policy of federal support for
public elementary and secondary education remained firmly in place. Most of the targeted
programs were retained by Congress.
Questions asked about how a policy or program is being run may include: What are its
financial costs? Who receives benefits (payments or services) and in what amounts? Is there
unnecessary overlap with or duplication of other programs? Are legislatively prescribed
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standards and procedures being followed? Is the program honestly administered? This kind
of evaluation, which may involve much monitoring of agencies and their officials, will tell
us something about whether there is honesty or efficiency in the conduct of a program, but
like the first kind of evaluation, it will probably yield little or nothing in the way of hard
information concerning the societal effects (outcomes) of a program. On the other hand,
process evaluation is often helpful to program
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managers wanting to improve the administration of their programs and reduce their
potential for political criticism.
A third, comparatively new type of policy evaluation, which has been getting increasing
attention in the national government in recent decades, is the systematic and intendedly
objective evaluation of programs. This form of evaluation, which I will refer to as systematic
evaluation, employs social science methodology to measure the societal effects of policies or
programs and the extent to which they are achieving their goals or objectives.
The Departments of Labor, Health and Human Services, and Energy, for instance, have
assistant secretaries whose responsibilities include program evaluation. Bureaus within
these and other departments often include policyand program-evaluation staffs. Moreover,
they enter into many contracts with private research organizations, university scholars, and
others for the performance of evaluation studies. More attention appears to be given to
evaluating social programs (welfare, education, health, and nutrition) than most other areas
of governmental activity. This preference probably arises from the proliferation of social
programs in recent decades, their substantial financial costs, the controversies that swirl
around them, and the dislike of “welfare.”
Systematic evaluation seeks information on the impact of a policy or program on the
public need or problem at which it is directed. Utilizing particularly the talents of social
scientists (economists, political scientists, psychologists, and sociologists), it involves the
specification of goals or objectives; the collection of information and data on program
inputs, outputs, and consequences; and their rigorous analysis, preferably through the use
of quantitative or statistical techniques.
Evaluation researchers use a variety of evaluation research designs, which are often
coupled with high-powered statistical and mathematical techniques. The three evaluation
designs discussed here—the experimental design, the quasi-experimental design, and the
before-and-after study—are basic. An examination of them will convey a notion of the
problems involved in setting up evaluation studies.
The experimental design is the classic method for evaluating a policy or program. Two
comparable groups—an experimental, or treatment, group and a control group—are
randomly selected from the target population. The experimental group receives treatment
through a policy or program; the control group does not. Pretests and posttests of the two
groups are used to determine whether changes, such as improved reading scores or lower
incidences of a disease, have occurred in the two groups. If the performance of the
experimental group is significantly better than that of the control group, the program is
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held to be effective. A high level of validity and generalizability is accorded the results of
experiments. An example is in order.
Several years ago, the Delaware Department of Labor conducted a field experiment to
assess the effectiveness of various activities in helping “dislocated workers”—“persons who
have lost long-term, stable jobs due to an increased international competition and/or
changing technology.” The goals of
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the program for dislocated workers, which was funded through the Job Partnership
Training Act, were to help increase workers' earnings and reduce their need for
unemployment compensation benefits. A coterie of 175 workers with comparable
characteristics was identified; 65 were randomly assigned to the treatment group, with the
other 110 becoming the control group. Members of the treatment group were provided
counseling on job-search activities, assistance in locating openings, retraining, and other
services. Both groups were monitored for a year. Comparison of their performance revealed
that the control group did better than the treatment group in meeting the program's goals. It
was concluded that “the program did not appear to improve participants' job prospects.”
Use of the experimental design may not be possible because of costs, time, and ethical or
other considerations. The quasi-experiment, then, may be a useful alternative. The process
of random selection is not used. Rather, the treatment group is compared with another
group (a “comparison group”) that is similar in many respects. Consequently, in the quasi-
experiment there is greater likelihood that the performances of the two groups could be
influenced by their internal characteristics rather than the program treatment. Quasi-
experiments nonetheless are still seen as quite useful for many purposes.
A well-known quasi-experiment involves the Connecticut highway speedcontrol
program. Following a record number of highway traffic fatalities, the state initiated a
crackdown on speeding. Initial data indicated that the enforcement program had
significantly reduced fatalities. It was possible, however, that this resulted from other
factors, such as differences in the weather or more safe cars in operation. To control for
such possibilities, the Connecticut highway fatality rate per 100,000 people was compared
with that of neighboring states where there had been no enhanced enforcement program.
This showed that Connecticut's fatality rate was lower than those of the other states, thus
supporting the inference that the Connecticut crackdown had a positive effect in reducing
traffic deaths.
The before-and-after study of a program compares the results of a program after a period
of implementation with the conditions existing prior to its inception. Thus, one might
compare the quality of water in a river before and after a pollution-control program was
put into effect. Before-and-after studies often have low costs and take less time to conduct. A
major drawback, however, is that the changes that occur are open to rival explanations.
Improved water quality in our imaginary river could be due to increased flow, voluntary
action by polluters, or an economic recession's having caused reduced industrial activity. On
the other hand, if a before-and-after study finds little change in the desired direction, then it
is likely that the program is not having much effect. Given all of this, it is still possible for
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before-and-after studies to produce useful information about a program that otherwise
would be unavailable.
As this discussion indicates, systematic evaluation draws on experience in assessing the
effects a policy or program has on the public need or problem at which it is directed. It
permits at least tentative, informed responses to such
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questions as: Is this policy achieving its stated objectives? What are its costs and benefits?
Who are its beneficiaries? What happened as a consequence of the policy that would not
have happened in its absence? Consequently, systematic evaluation gives policy-makers and
the general public, if they are interested, some notion about the actual impact of policy and
provides discussions of policy with some grounding in reality. Evaluation findings can be
used to modify current policies and programs and to help design others for the future.
Of course, evaluation studies can also be used for less laudable purposes. Professor Carol
Weiss comments, “Program decision-makers may turn to evaluation to delay a decision; to
justify and legitimate a decision already made; to extricate themselves from controversy
about future directions by passing the buck; to vindicate the program in the eyes of its
constituents, its funders, or the public; to satisfy conditions of a government or foundation
grant through the ritual of evaluation.” In short, evaluators may be motivated by self-
service as well as public service and by a desire to use analysis as ammunition for partisan
or personal political purposes. Thus, the staff of the Federal Paperwork Commission was
interested only in evaluations supportive of their goal of eliminating as much governmental
regulation of business as possible, albeit under the guise of paperwork reduction.
We now turn to some of the ways in which policy evaluation is handled in the national
government.
Policy Evaluation Processes
Much policy evaluation is performed by nongovernmental actors. The communications
media; university scholars and research centers; private research organizations such as the
Brookings Institution, the Urban Institute, and the American Enterprise Institute; pressure
groups; and public-interest organizations, such as Common Cause, the Audubon Society, and
Ralph Nader and his “raiders” (a collection of public-interest activists) are examples; all
make evaluations of public policies and programs that have greater or lesser effects on
public officials. They also provide the general public with information, publicize policy
success and failure, sometimes act as advocates for unpopular causes, and occasionally
provide representation for those unrepresented in the policy process, such as the aged
confined to negligently run nursing homes or exploited migratory farm workers.
Collectively, this aggregation of private evaluators of public policies has been designated
by Professor Richard Hofferbert as the “policy evaluation industry.” We will take a look
here at three of its components.
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Many university scholars engage in evaluation on their own initiative, as members of
university research centers, while under contracts with government agencies, or to gain
academic advancement or fame. Many universities have graduate schools of public policy
whose faculty have a more “applied” or practical orientation and are inclined to undertake
policy research. Some of
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the research of university scholars is published in such journals as Evaluation and Program
Planning, Evaluation Review, and Journal of Policy Analysis and Management. For the most
part, though, university scholars are more interested in making theoretical contributions to
their academic disciplines than in getting involved in current policy debates.
A number of private research organizations (“think tanks”) devote all or most of their time
to performing evaluation studies. The Manpower Development Research Corporation uses
funds from national, state, and local governments and foundations to research social
welfare and employment programs. The RAND Corporation operates mainly as a contract
researcher producing policy reports for the Department of Defense. Research organizations
of this sort often can act more independently and be more critical of agency actions than
can internal agency personnel. “Of course, contract researchers often face pressures to
follow the agency line, especially if they are highly dependent on a single agency.”
In their reporting of the news when public policies are involved, the media tend to focus
on policies and government actions that go awry. Some sort of policy scandal is even more
“newsworthy.” The operative assumption seems to be that that sort of reporting will attract
more viewers or readers than will information about a successful program or the routine
operations of government. Some years ago, one of the television networks featured an
occasional series titled “The Fleecing of America” as part of its evening news report. The
focus was on governmental blunders and misadventures. Coverage of this nature
contributes to the (incorrect) notion that “the government can't do anything well.” More
positively though, it may also help to focus public attention on some matters that need
examination and correction. Television and radio programs that recount public-policy
successes are scarce. One does not hear much about soil conservation, brownfield
restoration, railroad safety, or public housing.
Moving on, within the boundaries of the national government, policy evaluation is
performed in numerous ways by officials and organizations. Sometimes these evaluations
are rigorous and systematic; at other times, they are rather haphazard or sporadic. In some
instances policy evaluation has become formalized, a regular component of the policy
process; in others it remains essentially informal and unstructured. In the remainder of this
section, we glance at a few forms of official policy evaluation—congressional oversight,
Government Accountability Office (GAO) studies, the activities of presidential commissions,
and “in house” evaluations handled within agencies.
Congressional Oversight
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Although it is not specified in the Constitution, one of the primary functions of Congress is
the supervision and evaluation of the administration and execution of laws and policies,
which is commonly referred to as congressional oversight. Some, agreeing with the English
political theorist John Stuart Mill, think that this is the most important function a legislature
performs. Oversight, however, is not a24
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separable, distinct activity; rather, it is an integral part of almost everything that members
of Congress do, including gathering information, legislating, authorizing appropriations,
and being of service to constituents. It may be intended either to control the actions of
agencies, as when they sometimes are required to clear actions in advance with particular
committees, or to evaluate agency actions, as when individual members or committees seek
to determine whether administrators are complying with program objectives established by
Congress. It is the evaluative aspect of oversight that is pertinent here.
Oversight may be performed by a number of techniques, including (1) casework, that is,
intercession with agencies as a consequence of constituents' demands and requests; (2)
committee hearings and investigations; (3) the appropriations process; (4) approval of
presidential appointments; and (5) committee staff studies. In the course of these
activities, members of Congress reach conclusions about the efficiency, effectiveness, and
impact of policies and programs—conclusions that can have profound consequences for the
policy process. Congressional oversight is in essence more fragmented and disjointed than
continuous and systematic. Bits and pieces of information, impressionistic judgments, and
the members' intuition and values are blended to yield evaluation of policies and those who
administer them. On the whole, however, members of Congress are more likely to be
involved with initiation and adoption of policy than with evaluation, at least in any
systematic sense.
The congressional practice of enacting laws—for example, the Clean Air Act and the Head
Start law—for determinate lengths of time builds evaluation into the legislative process.
Periodically such laws have to be reauthorized by Congress, thereby creating opportunities
to make changes in them on the basis of experience and available information. At the state
level, sunset laws have a similar effect. These laws provide that state agencies will be
terminated unless they are periodically evaluated and reauthorized. The programs of a
terminated (“sunsetted”) agency may be shifted to another agency. That opportunities for
evaluation are created does not, of course, guarantee that they will be well exploited.
Government Accountability Office
The GAO, usually regarded as an arm of Congress, has broad statutory authority to audit the
operations and financial activities of federal agencies, to evaluate their programs, and to
report its findings to Congress. The agency, which has several thousand employees, has
become increasingly involved with the evaluation of programs and now gives only a minor
portion of its attention to financial auditing.
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The Legislative Reorganization Act of 1970, which revamped the congressional committee
system, also directed the GAO to “review and analyze the results of government programs
and activities carried on under existing law, including the making of cost-benefit studies,”
and to make personnel available to assist congressional committees in handling similar
activities. A subsequent
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statute authorized GAO to establish an Office of Program Review and Evaluation. Because of
its expanded evaluation activities, the agency hires many more people trained in the social
sciences than it once did.
Evaluation activities may be undertaken by the GAO on its own initiative, because of
directives in legislation, at the request of congressional committees, or sometimes at the
behest of individual members of Congress. In the course of a year, the GAO produces several
hundred evaluation studies, varying in length from several pages to a few hundred. The
titles of four evaluation studies issued by the GAO in 2012 indicate the diversity and
evaluative thrust of its actions: FDA's Food Advisory and Recall Process Needs
Strengthening; Border Security: Additional Steps Needed to Ensure that Officers Are Fully
Trained; Nuclear Safety: DOE Needs to Determine the Costs and Benefits of Its Safety Reform
Effort; and School Bullying: Extent of Legal Protections for Vulnerable Groups Needed to Be
More Fully Assessed. GAO officials are also frequently called upon to testify before
congressional committees.
Copies of GAO studies are sent to members of Congress and the affected agencies. The
agencies are required by law to report to Congress and the Office of Management and
Budget (OMB) on actions taken in response to the GAO's recommendations or on why they
did not act.
CASE STUDY The GAO and Food Safety
A short narrative will help convey an understanding of the GAO evaluation process. Food
safety is an ever-present problem in the United States. The federal Centers for Disease
Control and Prevention estimated in 2011 that about 48 million people in the United States
annually suffer from food-borne illnesses. These result in 120,000 hospitalizations and
3,000 deaths. In recent years, food poisoning outbreaks have been traced to lettuce,
peanuts, hamburger meat, and jalapeno peppers. For example, in 2011, Listeria bacteria on
cantaloupes grown in Colorado caused thirty-three deaths.
Fifteen federal agencies operating under more than thirty laws govern the U.S. food
supply. Primary among them are the Food and Drug Administration (FDA) in the
Department of Health and Human Services; the Food Safety and Inspection Service (FSIS),
the Agricultural Marketing Service (AMS), and the Grain Inspection, Packers and Stockyards
Administration (GIPSA) in the Department of Agriculture; and the National Marine
Fisheries Service (NMFS) in the Department of Commerce. The FDA regulates some 57,000
food-processing establishments and sets standards of quality and identity for food
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products. The FSIS supervises more than 6,000 plants engaged in slaughtering and
processing meat and poultry products. The AMS has jurisdiction over hundreds of egg and
egg-product facilities. The NMFS provides voluntary (fee for service) safety and sanitary
inspections for approximately 2,500 foreign and domestic seafood firms.
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In 1992, at the request of a House subcommittee chair, the GAO undertook an evaluation
of the consistency, coordination, and effectiveness of the federal food-safety inspection
program. Data and information for the study were acquired by interviewing agency
officials; by analyzing agencies' inspection policies, procedures, and records; and by
meeting with industry and consumer groups.
The GAO reached several negative conclusions about the food-safety inspection system.
Food products presenting similar health risks were treated differently by the various
agencies, duplicative inspections occurred, and coordination among the agencies was
inadequate. The agencies' effectiveness was limited by inconsistencies and illogical
differences, based on statutory authority and funding, in their approaches to food safety.
Thus, plants processing meat and poultry were inspected daily by the FSIS, but food-
processing plants under FDA jurisdiction were inspected once every three to five years.
Further, the agencies drew some narrow jurisdictional lines. For one, the FSIS handled
inspection of open-faced meat sandwiches made with one slice of bread whereas the
traditional sandwich made with two slices of bread was the FDA's responsibility. For
another, pizza with meat topping was inspected by the FSIS, pizza without meat topping by
the FDA.
Finally, meat and poultry plants were required to register for inspection with the FSIS
before they could operate and sell their products. In contrast, food-processing factories
were under no such mandate and had to be tracked down by the FDA.
To correct these and other problems, the GAO recommended the creation of a single food-
safety agency. Because this was not a good political possibility, the GAO said a “more
realistic” alternative would be the appointment of a panel of experts to develop an
inspection model based on public-health risks and strong enforcement authority. This
would provide a rational basis for improving the effectiveness of the food-safety system. No
Congressional action was taken on the GAO's recommendations.
Since 1992, the GAO has produced dozens of studies regarding the foodsafety system,
calling for reform and the creation of a single, independent food safety agency. Members
of Congress have introduced bills calling for creation of a unified Food Safety
Administration. However, because of resistance from committees with jurisdiction over
various aspects of food safety, reservations about the creation of a consolidated agency, and
lack of strong public concern, the single-agency idea has foundered.
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Some improvements have been made to protect the food supply. In 2011, the Food Safety
and Modernization Act became law. It strengthens the authority of the FDA to regulate the
way foods are grown, harvested, and processed. Inspections of food facilities will become
more frequent and the agency was given authority to require food recalls. Also, the FDA's
authority to protect against threats to the food supply under the Bioterrorism Act of 2002
was enhanced.
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Generally, however, the food safety system continues to be characterized by
fragmentation, duplication, and insufficient resources. The GAO's proposal for a single
agency continues to be unacceptable to the Congress.
Presidential Commissions
Earlier we examined the presidential commissions' role in formulating policy. Now we will
see that they can also be used as an instrument of policy evaluation. Whether set up
specifically to evaluate policy or governmental management in some area or for other
purposes such as fact finding, making policy recommendations, or simply creating the
appearance of presidential concern, most commissions involve themselves in policy
evaluation to some degree.
In November 1986, it was disclosed that the U.S. government, under the leadership of
National Security Council (NSC) officials, had sold arms to the Iranian government and
diverted some of the profits to the Nicaraguan rebels (the “Contras”). This news touched off
a major political controversy. To inquire into this matter and to make recommendations for
correction, President Reagan appointed the President's Special Review Board. Better known
as the Tower Commission, it was composed of former Republican senator John Tower (from
Texas) as chair; Edmund Muskie, former Democratic senator from Maine and secretary of
state; and Brent Scowcroft, former national security adviser to President Gerald Ford (and
later to President George Bush).
In its report issued early in 1987, the Tower Commission sharply criticized President
Reagan and his administration for their conduct in the Iran-Contra affair. The NSC was
depicted as carrying on operations outside its advisory realm, deceiving Congress, paying
little heed to the law, and avoiding any effective oversight. The president himself was
viewed as uninformed, detached, and not in control of NSC action, which ran counter to his
administration's own policy of no arms sales to the Iranians. The commission's report made
specific recommendations for bringing the NSC system under more effective presidential
control and direction. President Reagan accepted the commission's report and instituted
some changes designed to prevent recurrence of such problems.
A more traditional presidential commission was the sixteen-member Social Security
Commission established by President George W. Bush to appraise the Social Security
program and propose ways to strengthen it. Much as its Democratic critics contended it
would, given its membership, the commission set forth three options for partial
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privatization of the program in its report. It is not uncommon for commissions to reach
conclusions agreeable to the appointing president. Some do not, however. A commission
appointed by President Richard Nixon to recommend actions on marijuana surprised him
by calling for its legalization. The President refused to even read the report.
It appears that the policy evaluations and recommendations made by presidential
commissions often have little immediate influence on policymaking. For whatever effect
they do have, the important variables are probably not the quality and soundness of their
findings. Charles Jones concludes that an
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evaluation commission is likely to have the greatest effect when its report coincides with
other supporting events and accords with the president's policy preferences, when it
includes some members who hold important governmental positions and are committed to
its recommendations, and when commission staff personnel return to governmental
positions in which they can influence acceptance of its recommendations. These
conditions, however, are often not present.
Administrative Agencies
Many evaluations of policies and programs are produced within the administering agencies,
either on their own initiative or at the direction of Congress or the executive. Agencies
usually want to get some notion of how their programs are working and what can be done
to improve them. Educational program evaluations are often labeled either formative or
summative. Formative evaluations (also known as program monitoring) are designed to
assist officials in making mid-course corrections or adjustments in programs to improve
their operation. Summative evaluations are broader and more thorough in scope and are
used to inform upper-level policy-makers of the overall effects of important policies and
programs. They may lead to major program changes. There is not much reason to expect,
however, that such evaluations will cause agency officials to recommend terminating
favored policies or programs.
The Johnson, Nixon, and Carter administrations tried to build policy analysis and
evaluation into the national budgetary process. The Johnson administration instituted the
Planning-Programming-Budgeting System (PPBS), which required agencies to search for the
most effective and efficient (least-cost) means to achieve their goals. (Remnants of PPBS
remain in a few agencies.) The Nixon administration replaced PPBS with Management by
Objectives (MBO), a more modest effort requiring agencies to specify goals and measure
progress toward achieving them. By the time the Carter administration came to town and
installed Zero-Base Budgeting (ZBB), MBO had evaporated. The ZBB required agencies to
specify different levels of funding and accomplishment for programs, including the “zero”
base (defined not as nothing but rather as the funding level below which the program
would have no real worth). By so doing, agencies would assess the worth of programs and
indicate where spending would do the most good. ZBB did not survive the Carter
administration.
These efforts at reform failed for several reasons. They were instituted on a government
wide basis without much planning or testing, they conflicted with existing budgetary
practices and habits, they were difficult and time-consuming to use, they were viewed as
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efforts to shift power to higher executive levels, and they lacked continuing presidential
interest and support. They were not, however, without effect, for they left behind in the
agencies a residue of interest and support for more systematic analysis and evaluation of
agencies' activities. It has now become fairly standard practice for Congress to specifically
direct agencies to undertake program and policy evaluations.
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Agencies are not prone to evaluate themselves. The conduct of their programs and day-to-
day operations take precedence over more “distant” concerns like program evaluations.
Moreover, evaluation would divert scarce funds from current operations—issuing licenses,
making grants, processing applications, inspecting products and facilities, and so on. If
evaluation of program effectiveness were conducted, and it turned out unfavorable from
the agency's perspective, it could be used as political ammunition by the agency's critics. In
all, agencies do not have much incentive to evaluate themselves.
The Government Performance and Results Act (GPRA) (1993), supported by the Clinton
administration and enacted by Congress with little controversy or public notice, is intended
to shift the focus of agencies from inputs and processes to outputs and outcomes—or
results. That is, how do agency operations affect such matters as air quality, industrial
safety, the employability of job trainees, or investment opportunities? This is a laudable
aspiration.
To accomplish this purpose, agencies are directed to work with Congress and its
committees in formulating five-year strategic plans. These plans are to include “(1) the
annual performance goals for agencies' major programs and activities, (2) the measures that
will be used to gauge performance, (3) the strategies and resources required to achieve the
performance goals, and (4) the procedures that will be used to verify and validate
performance information.” In 1999, after trial runs in a few agencies, the GPRA became
effective for all agencies who annually report in March on their progress and results.
Successfully implemented, the GPRA should facilitate program evaluation and provide
useful information for executive and congressional budget decision- makers. Initially,
agencies had problems in putting GPRA requirements in place. Thus, the Department of
Education's progress in attaining some of its outcome goals was difficult to appraise because
of data shortages. In other instances, it showed little progress in achieving outcome goals.
For the Environmental Protection Agency (EPA), the GAO reported that “the annual
performance measures established under GPRA are often selected on the basis of available
data that focus primarily on outputs rather than environmental results [or outcomes] for
which credible data are often lacking.”
The agencies have continued to wrestle with GPRA mandates. What has been
accomplished?” Some believe that GPRA has followed the path of previous reforms—a big
investment by agencies at the outset leading to the generation of vast amounts of
paperwork that satisfy formal requirements but provide little evidence that the innovations
have made a dent in behavior or decisions.” A less cynical view holds that GPRA has been
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beneficial. Some congressional appropriations committees, for example, have pressured
agencies to include information on outcomes or results in their budget justifications.
In 2010, in an effort to strengthen the act, Congress enacted the Government Performance
and Results Modernizations Act. Requirements for agencies to consult with Congress were
enhanced. A new framework was specified aimed at getting agencies to take a more
crosscutting and integrated approach to focusing on results and improving government
performance. The GAO is to
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evaluate agency accomplishments. Performance evaluation continues to be an appealing
idea, if less than fully successful.
Problems in Policy Evaluation
The most useful form of policy evaluation for policy-makers and administrators, and for
policy critics who want a factual basis for their positions, is a systematic evaluation that
tries to determine cause-and-effect relationships and rigorously measures the results of
policy. It is, of course, often impossible to measure quantitatively the effect of public
policies, especially social policies, with any real precision. In this context, then, to “measure
rigorously” is to seek to assess policy impacts as carefully and objectively as possible, using
the best information available and making careful judgments. There is no reason to assume
that only quantitative data and analysis are meaningful.
Determining whether a policy or program is doing what it is supposed to do, or doing
something else, is not an easy, straightforward task, as some appear to assume. Snap
judgments are easy to make but lack definitiveness. A variety of conditions raise obstacles
or create problems for the effective accomplishment of policy evaluation. These include
uncertainty over policy goals, difficulty in determining causality, diffuse policy impacts, and
others, all of which are reviewed in this section.
Uncertainty over Policy Goals
When the goals of a policy are unclear, diffuse, or diverse, as they frequently are,
determining the extent to which they have been attained becomes a difficult and frustrating
task. This situation is often a product of the policy-adoption process. Because the support
of a majority coalition is needed to secure adoption of a policy, it is usually necessary to
appeal to persons and groups possessing differing interests and diverse values. To win their
votes, commitments to the preferred policy goals of these various groups may be included in
the legislation.
The Model Cities Act, enacted during the Johnson administration, was a laudable attempt
to confront urban problems. Goals of the Model Cities Act included rebuilding slum and
blighted areas; improving housing, income, and cultural opportunities therein; reducing
crime and juvenile delinquency; lessening reliance on welfare programs; and maintaining
historic landmarks. No priorities were assigned to the various goals; nor, indeed, were their
dimensions well-specified. Substantial funding was provided for Model Cities evaluation
research, which was supposed to determine the extent to which the diverse goals of the act
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were being met. Limited in impact at best, the Model Cities program has been relegated to
the dustbin of history.
Determining the real goals of a program can be a difficult or conflictual task. Persons
occupying different positions in the policy process, such as legislators and administrators, or
national and state officials, or possessing differing ideological or philosophical perspectives,
may define goals differently,
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act accordingly, and reach differing conclusions about a program's accomplishments or
success. Moreover, “because ‘what you measure is what you get,’ choosing the right goals to
measure is essential.” Later in this chapter, we will see how the multiple goals of the Head
Start program, and measurement problems, have complicated its evaluation.
Difficulty in Determining Causality
Systematic evaluation requires that societal changes must be demonstrably caused by policy
actions. The mere fact that when action A is taken, condition B develops does not
necessarily mean the presence of a cause-and-effect relationship. Other actions (or
variables) may have been the actual causes of condition B. As we know, many common
colds are “cured,” not by ingesting medicines, applying ointments, or using nasal sprays, but
by the human body's natural recuperative power.
Consider this example. Many states require periodic automobile safety inspections in an
attempt to reduce highway traffic accidents and fatalities. Research indicates that states
with mandatory inspection laws do tend to have fewer traffic fatalities than do other states.
Other factors, however, such as population density, weather conditions, and percentage of
young drivers might in fact have more power in explaining the difference. Only if such
conditions are controlled in the analysis, and if differences remain between states with and
without inspections, can it be accurately stated that a policy of periodic automobile
inspections reduces traffic deaths. In actuality, such laws do seem to have a modest
beneficial effect.
To further illustrate the problem of determining causality, let us take the case of crime-
control policies. The purpose, or at least one of the purposes, of these policies is deterring
crime. Deterrence may be defined as the prevention of an action that can be said to have
had a “realistic potential of actualization,” that is, one that really could have happened.
(This assumption is required to avoid the kind of analysis that holds, for example, that
consumption of alcoholic beverages prevents stomach worms since no one has ever been
afflicted with them after starting to drink.) The problem here is that not doing something is
a sort of nonevent, or intangible act. Does a person's not committing burglary mean that he
or she has been effectively deterred by policy from so acting? The answer, of course, first
depends upon whether he or she was inclined to engage in burglary. If so, then was the
person deterred by the possibility of detection and punishment, by other factors such as
family influence, or by lack of opportunity? As this example indicates, the determination of
causality between actions, especially in complex social and economic matters, frequently is
a daunting task.
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Diffuse Policy Impacts
Policy actions may affect groups other than those at whom they are specifically directed. A
welfare program may affect not only the poor but also others such as taxpayers, public
officials, and low-income people who are not receiving welfare benefits. The effects on these
groups may be either symbolic or material. Taxpayers may
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grumble that their “hard-earned dollars are going to support those too lazy to work.” Some
low-income working people may indeed try to go on welfare rather than continue working
at grubby, unpleasant jobs for low wages. So far as the poor who receive material benefits
are concerned, how do benefits affect their initiative and self-reliance, family solidarity, or
maintenance of social order? We should bear in mind that policies may have unstated
intentions. Thus, an antipoverty program might have been covertly intended to help defuse
the demands of black activists, or a program to control importing of beef may be intended to
appease cattle growers politically but not really do much to limit foreign competition.
The effects of some programs may be very broad and long-range in nature. Antitrust
policy is an example. Since the policy was originally intended to help maintain competition
and prevent monopoly in the economy, how does one now evaluate its effectiveness? We
can look at current enforcement activity and find that some mergers have been prevented
and many price-fixing conspiracies have been prosecuted, but this record will tell us little
about the extent of competition and monopoly in the economy generally. It would be
pleasing to be able to determine that the economy is n percent more competitive than it
would have been without antitrust policy. Because its goals are general and because
measuring competition and monopoly is difficult, this determination just is not possible.
Interestingly, after a century of antitrust action, we are still without agreed-upon definitions
of monopoly and competition to guide policy action and evaluation. No wonder those
assessing the effectiveness of antitrust policy sometimes come to sharply different
conclusions.
Difficulties in Data Acquisition
As implied in some previous comments, a shortage of accurate and relevant statistical data
and other information may handicap the policy evaluator, particularly when one's concern
is with policy outcomes. Thus, an econometric model may predict how a tax cut will affect
economic activity, but suitable data to indicate its actual impacts on the economy are hard
to come by. Again, think of the problems in securing the data needed to determine the effect
on criminal-law enforcement of a Supreme Court decision such as Miranda v. Arizona,
which held that a confession obtained when a suspect had not been informed of his or her
rights when taken into custody was inherently invalid. The members of the President's
Crime Commission in 1967 disagreed about its effect, the majority saying it was too early to
determine results. A minority, however, held that, if fully implemented, “it could mean the
virtual elimination of pretrial interrogation of suspects . . . . Few can doubt the adverse
effect of Miranda upon the law enforcement process.” Absence of data does not
necessarily hinder many evaluators.
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The use of “Miranda cards” to inform suspects of their rights now has become standard
police practice. A consensus exists among criminal-justice scholars and law-enforcement
officers to the effect that this reform has had
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little adverse effect on law enforcement. Various field and quantitative studies support this
view. Moreover, it is suggested that the Miranda rule has helped improve professionalism
among the police.
For many social and economic programs, a question that typically arises is “Did those who
participated in programs subsequently fare better than comparable persons who did not?”
Providing an answer preferably involves an experimental evaluation design utilizing a
control group. The difficulty in devising a control (or comparison) group for a workforce
program is summed up in this passage:
A strict comparison group in the laboratory sense of the physical sciences is virtually
impossible, primarily because the behavior patterns of people are affected by so many
external social, economic, and political factors. In fact, sometimes the legislation itself
prevents a proper comparison group from being established. For example, the Work
Incentive Program legislation required that all fathers must be enrolled in the WIN
program within 30 days after receipt of aid for their children. Therefore, a comparison
group of fathers with comparable attributes to those fathers enrolled in the program
could not be established. Even if all the external factors of the economy could be
controlled, it would still be impossible to replicate the social and political environment
affecting any experimental or demonstration program. Thus, it is easy for a decision
maker to discount the results of almost any evaluation study on the basis that it lacks
the precision control group.
Because of problems such as those mentioned in the quotation, experimental designs
frequently cannot be used. (This reason is apart from their often high dollar cost.) Second-
best alternatives must then be utilized, such as a quasiexperimental design using a
nonequivalent control group.
Official Resistance
Evaluating policy, whether it be called policy analysis, measurement of policy impact, or
something else, involves reporting findings and making judgments on the merits of policy.
This is true even if the evaluator is a university researcher who thinks that he or she is
objectively pursuing knowledge. Agency and program officials will be alert to the possible
political consequences of evaluation. If the results do not come out “right” from their
perspective, or worse, if the results are negative and come to the attention of decision-
makers, their program, influence, or careers may be thrown in jeopardy. Consequently,
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program officials may discourage or disparage evaluation studies, refuse access to data, or
keep incomplete records.
Within agencies, evaluation studies are likely to be most strongly supported by higher-
level officials who must make decisions about the allocation of resources among programs
and the continuation of given programs. They may, however, be reluctant to require
evaluations, especially if their results may have a divisive effect within the agencies. Finally,
organizations tend to resist change, and evaluation implies change. Organizational inertia
may thus be an obstacle to evaluation, along with more overt forms of resistance.
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A Limited Time Perspective
The time horizon of legislators and other elected officials often extends only as far as the
next election. Consequently, they, and others who think like them, often expect quick results
from governmental programs, even social and educational programs whose effects may
take many years to fully appear. This being the case, short-run evaluations of program
accomplishments may be unfavorable.
A good example is the New Deal's resettlement program, which provided opportunities for
land ownership to thousands of black sharecroppers in the South during the late 1930s and
early 1940s. It was judged as a failure and just another New Deal boondoggle by
contemporary critics. A decades-later evaluation of the program by policy analyst Lester
Salamon concluded, however, that it had significant, positive, long-term effects, although
not as an agricultural policy. At modest cost, it did transform “a group of landless black
tenants into a permanent landed middle class that ultimately emerged in the 1960s as the
backbone of the civil-rights movement in the rural South.” If the time dimension is ignored
in evaluation studies, the results may be flawed and neglect important long-term effects.
The pressure for rapid feedback concerning a policy can then create a dilemma for the
evaluator.
Evaluation Lacks Influence
Once completed, an evaluation of a program may be ignored or attacked as inconclusive or
unsound on various grounds. It may be alleged that the evaluation was poorly designed, the
data used were inadequate, or the findings are inconclusive. Those strongly interested in a
program, however, whether as administrators or beneficiaries, are unlikely to lose their
affection for it merely because an evaluation study concluded that its costs are greater than
its benefits. Moreover, there is also the possibility that the evaluation is flawed.
Governmental programs are not terminated solely as a consequence of an unfavorable
systematic evaluation, although such evaluations did contribute to adoption of the Airline
Deregulation Act. Of course, evaluations frequently lead to incremental changes or
improvements in the design and administration of programs. That is the intent of many
program evaluations done by the GAO, for instance, which, perhaps, is all that should be
asked or expected of most evaluations.
Policy Evaluation: The Use and Misuse of Cost-Benefit Analysis
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Cost-benefit analysis is a formal, quantitative evaluation technique that requires identifying
the costs and benefits of either a proposed or actual policy and translating them into
monetary values for purposes of comparison. It assumes that society will be made better off
only by policies (or projects, or programs) whose benefits exceed their costs. Cost-benefit
analysis has been most frequently used to evaluate proposed policies.
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Sometimes, though, it is employed to appraise existing policies. Thus, economist A. Myrick
Freeman III used it to evaluate national air- and waterpollution- control policies. He found
that the control of air pollution from stationary sources yielded benefits that were much
greater than control costs. On the other hand, the costs of controlling industrial and
municipal sources of water pollution were greater than the benefits realized. In the
following discussion, the focus will be on cost-benefit analysis primarily as a prospective
evaluation technique.
The major steps in performing a cost-benefit analysis can readily be summarized. First,
one identifies all of the effects or consequences of a policy and categorizes them as costs or
benefits for various groups. (Note that this requires establishing which groups are entitled
to be considered in determining costs and benefits.) Both direct and indirect effects should
be analyzed.
Second, dollar values are placed on various costs and benefits. This will be relatively easy
for items that are customarily bought and sold in markets. For such matters as good health,
the prolongation of human life, or scenic vistas, it will be much more difficult.
Third, some of the consequences or effects of a policy will be current or near-term, but
others will occur many years in the future, or even the next generation. Hence, proponents
of cost-benefit analysis call for a discount rate to equate the value of near and long-term
effects. The basic assumption underlying the discount rate is that a dollar today is worth
more than a dollar years from now. Inflation may reduce the dollar's value or purchasing
power. Alternatively, the money could be invested and its value would increase. My guess is
that most readers would prefer a thousand dollars today to a thousand dollars seventeen
years from now. What is the explanation?
Fourth, the costs and benefits, direct and indirect, current and future, of the policy are
compared. If benefits exceed costs, the policy is acceptable; conversely, if costs exceed
benefits, it should be rejected, or a better way of doing it should be found.
So presented, cost-benefit analysis appears as a reasonably clear-cut method for
appraising policies. In actuality, there are significant problems involved in its application, a
few of which are examined here.
Good data on the costs and benefits of a policy are frequently difficult to come by. How, for
example, does one calculate the value of the health benefits of cleaner air? Or of the esthetic
benefits of reducing haze in national parks? How are dollar values to be assigned to such
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matters? The value of land flooded (a cost) for a reservoir can readily be determined by
reference to the value of nearby land. But what of the value of an ancestral home located
there? The data and dollar values on which a cost-benefit analysis is based can be of
tenuous and arguable nature. Professor Frank Rourke states that “the numerical values
assigned to both costs and benefits are more often the product of imagination than
mathematical skill.”
It is, further, no easy task to identify the appropriate discount rate. It can be based on such
criteria as the interest rate, the rate of inflation, or the
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opportunity costs of capital—that is, the rate of return that money would earn if devoted to
private investment rather than public purposes. Despite its importance, there is no scientific
way to decide on a discount rate. A low discount rate preserves the value of future benefits
whereas a high discount rate can sharply reduce their value. During the Reagan years, the
OMB advocated a discount rate of 10 percent. This discount rate meant that the value of
future benefits, such as lives prolonged two or three decades hence by reducing the
incidence of cancer, would have very low value. This, in turn, increased the likelihood that a
cost-benefit ratio would be unfavorable, and that regulation would not be justifiable.
Cost-benefit analysis is based on the premise that efficiency is the primary, if not the only,
value to be realized. Actions are evaluated on the basis of whether resources are used to
improve the aggregate public good. Little attention is accorded alternative or competing
values—equity, human dignity, personal freedom, and equality, to name some. These are
important to most people. The American system of criminal justice, for instance, is not very
efficient because of our concern with equity and due process.
Another problem that arises in the course of many cost-benefit analyses is the need to
place a value on a human life. Some take the position that life is priceless and that
attempting to place a dollar value on life reduces it to just another commodity. In response it
is argued that many policy decisions, such as industrial-safety standards and highway speed
limits, have an impact in terms of human lives. It is better to objectively take into account
the value of life. The EPA in 2008 determined that the “value of a statistical life” was $6.9
million in current dollars, nearly a million dollars less than five years earlier. This figure
was calculated from opinion surveys asking people what they were willing to pay to avoid
specified risks and what employers paid employees to assume additional risks. (Figure 7.1
displays some alternatives for valuing a human life.) The EPA has traditionally put the
highest value on human life of any federal agency. Interestingly, all units within the EPA do
not use the same figure. Under the cost-benefit regimen, the less a life is worth, the less
need for regulatory protection, and vice versa.
Finally, let us note that cost-benefit analysis emphasizes the consequences for society as a
whole. As we know, however, public policies distribute advantages and disadvantages, or
costs and benefits. Those who pay the costs of policies often do not benefit from them, and
vice versa. Put differently, policies have distributive consequences that are of importance.
People may appropriately be more concerned with who benefits from industrial-safety
policies than whether their total costs exceed their benefits.
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Problems such as those sketched here have not prevented cost-benefit analysis from being
used as a tool in governmental decision-making for several decades. The Flood Control Act
of 1936 specified that flood-control projects could be undertaken by the Army Corps of
Engineers only “if the benefits to whomsoever they may accrue are in excess of the
estimated costs.” This standard must also be used for water projects handled by the Natural
Resources Conservation Service and has been voluntarily employed by the Bureau of
Reclamation. In the 1960s, cost-benefit analysis was first used in evaluating defense
programs and then domestic programs as part of PPBS.
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FIGURE 7.1 The Valuation of Human Life
In the 1970s, Presidents Ford and Carter directed executive-branch regulatory agencies to
prepare “inflation impact statements” and “regulatory analyses,” respectively, in developing
some proposed regulations. These statements involved analyzing their expected economic
consequences. The Carter administration made it clear, however, that although regulatory
agencies should consider the burdens and gains of proposed regulations, a cost-benefit test
was not to be used in appraising them.
A goal of the Reagan administration when it took office was to substantially reduce
governmental regulation of private economic activity. People who were critical of the
programs under their jurisdiction were appointed to regulatory positions. A second action
involved issuing Executive Order 12291 in
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February 1981, which drew heavily upon the Carter administration's experience. The
order required that proposed major regulations issued by executivebranch agencies (the
independent regulatory commissions were exempt) must be accompanied by regulatory
impact analyses assessing the potential benefits, costs, and net benefits of the regulations,
including effects that could not be quantified in monetary terms, unless such calculations
were prohibited by law. Some statutes ban the use of cost-benefit analysis for the programs
they establish.
Major regulations were defined as those likely to have an annual impact on the economy
of $100 million or more, to lead to major cost or price increases, or to have “significant
adverse effects on competition, employment, investment, productivity, innovation, or the
ability of U.S.-based enterprises to compete with foreign-based enterprises in domestic or
export markets.” The OMB was authorized to make the final determination of what was a
major rule, to supervise the evaluation process, and to delay the issuance of proposed or
final rules if it found the regulatory analyses were unsatisfactory.
Rules could be issued only if their estimated benefits exceeded their estimated costs. If a
choice was available, the less costly alternative was to be selected. The burden of proof that
this standard was met rested with the agency. An action by the OMB holding up a rule could
be appealed to the President's Task Force on Regulatory Relief, which was staffed by the
OMB and comprised several executive officials under the leadership of Vice President
George Bush. (The word relief in the task force's title indicates its orientation.) Although the
task force was phased out in 1983, all of this planning was intended to ensure, among other
things, that “Regulatory Action shall not be undertaken unless the potential benefits to
society for the regulation outweigh the potential costs to society.” Thus, cost-benefit analysis
was to be more than an analytical technique; it became a decision rule with a conservative
bias.
The Reagan regulatory-analysis program was a center of controversy. Critics contended
that it was used improperly to reduce the extent of regulation and to delay the issuance of
rules rather than to improve the quality of regulations by encouraging better analysis. The
OMB was also accused of improperly interfering in the regulatory process by usurping
authority vested in the regulatory agencies. The administration denied such accusations. In
practice, though, administration officials demonstrated much more vigilance about the costs
than the benefits of regulation in trying to reduce the burden of regulatory activity on
businesses.
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The George Bush administration continued the regulatory-analysis program and in time
created the Council on Competitiveness, an interagency committee chaired by Vice
President Dan Quayle, to work with the OMB in perpetuating the use of cost-benefit
analysis. In the final two years of the George Bush administration, the Council on
Competitiveness acted vigorously to represent the business community in the regulatory
process and to reduce the number and strength of new regulations. For the most part, it
avoided publicity and sought to leave few “fingerprints.”
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The Clinton administration quickly abolished the Council on Competitiveness and later
replaced Executive Order 12291 with its Executive Order 12866, entitled “Regulatory
Planning and Review.” The Clinton regulatory-review program continued to make use of
cost-benefit analysis for major rules. Regulatory review, however, was conducted more
openly and less stringently and intrusively than under the Reagan and George Bush
administrations. Regulatory agencies experienced little to complain about.
The George W. Bush administration retained Clinton's executive order. The Office of
Information and Regulatory Affairs (OIRA), however, now came under the direction of a
true believer in cost-benefit analysis. Much of his activity at a university policy center had
been funded by business corporations. In its first few months under the Bush
administration, OIRA rejected twentyone proposed regulations, more than had been turned
down by the Clinton administration in eight years. This was not surprising given the
strongly conservative, antiregulation stance of the George W. Bush administration. OIRA
continued for the next seven years to take a tough stance on proposed rules.
As the record here presented indicates, the uses of cost-benefit analysis, and presidential
review of proposed regulations, have become regularized features of the regulatory process.
They will continue under the Obama administration, albeit with softening modifications.
How they are implemented depends substantially upon the ideological leanings of a
presidential administration. Clearly, cost-benefit analyses is a malleable evaluation
instrument.
Fairly used, cost-benefit analysis may contribute to rationality in the decisionmaking
process by aiding in the identification and appraisal of alternatives, helping to identify
impacts or consequences, and otherwise developing information and insights that will assist
persons in making reflective, wellconsidered decisions. A careful appraisal of the likely
costs and benefits of a proposed action, and of the persons and groups upon whom they will
fall, is certainly useful, regardless of whether all are converted into dollar figures, and
without converting cost-benefit analysis into a decision rule.
Cost-benefit analysis, however, is open to manipulation to support the values and
preferences of its users. In the instance of Executive Order 12291, because of the stoutly
antiregulatory orientation of its implementers, it became a form of partisan political
analysis dressed up as regulatory rationality. Again, it is doubtful that the Army Corps of
Engineers has ever been unable to undertake a rivers-and-harbors project that its officials
really wanted to construct because a favorable cost-benefit analysis could not be contrived.
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Policy evaluation, as our discussion indicates, is more than a technical or objective
analytical process; it is also a political process. In the next section, a case study of the Head
Start program illustrates how political factors can affect the conduct and results of an
evaluation of a social program. The case also demonstrates that such evaluations, even
when intended to be neutral or objective in form, become political because they can affect
allocation of resources.
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CASE STUDY The Politics of Evaluation: Head Start
In January 1965, President Lyndon Johnson announced that a preschool program named
Head Start would be initiated as part of the Community Action Program (CAP) authorized
by the Economic Opportunity Act of 1964. The Head Start program, which was designed to
help overcome the effects of poverty on the educational achievement of poor children,
included early classroom education, nutritional benefits, parent counseling, and health
services.
Initially, $17 million in CAP funds was earmarked for summer 1965 to enable 100,000
children to participate in Head Start. The announcement of the program, however,
produced requests for a much larger volume of funds from many localities. Officials in the
Office of Economic Opportunity (OEO), who had jurisdiction over the program, decided to
meet this demand. Ultimately, $103 million was committed to provide places for 560,000
children. To say the least, the Head Start program was highly popular, undoubtedly because
it directed attention to poor preschool children, who readily aroused the public's sympathy,
and to the goal of equal opportunity.
Late in the summer of 1965, Head Start became a permanent part of the antipoverty
program. According to President Johnson, Head Start had been “battle-tested” and “proven
worthy.” It was expanded to a full-year program. In fiscal year 1968, $330 million was
allocated to provide places for 473,000 children in summer programs and another 218,000
in full-year programs, making Head Start the largest component of the CAP. Essentially,
Head Start was a multifaceted program for meeting the needs of poor children. More than a
traditional nursery school or kindergarten program, it was designed also to provide poor
children with physical- and mental-health services and nutritious meals to improve their
diet. Further, an effort was made to involve members of the local community in the
operation of the program.
With this background, let us turn to evaluation of the program. The OEO was among the
agency leaders in efforts to evaluate social programs because of statutory requirements.
Within the agency the task of evaluating its programs for overall effectiveness was assigned
to the Office of Research, Plans, Programs, and Evaluations (RPP&E). Some early efforts had
been made to evaluate the effectiveness of Head Start, mostly by Head Start officials and
involving particular projects, but by mid-1967, no solid evidence was available on overall
program effectiveness. This lack was beginning to trouble OEO officials, the Bureau of the
Budget, and some members of Congress.
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The Evaluation Division of RPP&E, as part of a series of national evaluations of OEO
programs, proposed an ex post facto study design for Head Start in which former Head
Start children currently in the first, second, and third grades of school would be given a
series of cognitive and affective tests. Their test scores would then be compared with those
of a control group who had not been in the Head Start program. The Evaluation Division
believed such a design would yield results more quickly than a longitudinal study that,
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although more desirable, would take longer to complete. (A longitudinal study examines
the effect over a period of time of a program on a given group.)
Within the OEO, Head Start officials opposed the proposed study on various grounds,
including its design, the test instruments to be used, and the focus on only the educational
aspect of the program to the neglect of its other goals—health, nutrition, and community
involvement. The RPP&E evaluators acknowledged the multiplicity of Head Start goals but
contended that cognitive improvement was its primary goal. They agreed with Head Start
officials that there were risks in making a limited study, such as possibly misleading
negative results, but insisted that the need for evaluative data necessitated taking the risks.
In the wake of much internal debate, the OEO director decided the study should be made,
and in June 1968 a contract was entered into with the Westinghouse Learning Corporation
and Ohio University. The study was conducted in relative quiet, but hints of its negative
findings began to surface as it neared completion.
Early in 1969, a White House staff official became aware of the Westinghouse study and
requested information on it because the president was preparing an address on the
Economic Opportunity Act that would include a discussion of Head Start. In response to the
request, OEO officials reported the preliminary negative findings of the study. In his
message to Congress on economic opportunity on February 19, 1969, President Nixon
referred to the study, commenting that “the preliminary reports . . . confirm what many
have feared: the long-term effect of Head Start appears to be extremely weak.” He went on
to say that “this must not discourage us” and spoke well of the program. Nonetheless, his
speech raised substantial doubts about Head Start among many observers in the public
arena.
The president's speech also touched off considerable pressure for release of the study's
findings. The OEO officials were reluctant to do this because what had been delivered to
them by Westinghouse was a preliminary draft intended for use in deciding such matters as
what additional statistical tests were needed and what data required reanalysis. From
Congress, where hearings were being held on OEO legislation, claims were made that the
study was being held back to protect Head Start and that the report was going to be
rewritten. The pressure on the White House became sufficiently great that it directed the
OEO to make the study public by April 14. A major conclusion of the report was that the
full-year Head Start program produced a statistically significant but absolutely slight
improvement in participant children.
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The release of the report set off a flood of criticism from Head Start proponents, including
many academicians, directed at the methodological and conceptual validity of the report. A
sympathetic article on the front page of The New York Times bore the headline “HEAD
START REPORT HELD ‘FULL OF HOLES .’ ” Much of the ensuing controversy focused on the
statistical methods used in the study and involved a broad range of claims, charges,
rebuttals, and denials. The proponents of Head Start seemed to fear that their program was
being victimized by devious intent. This fear had several facets. One was that
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persons within the OEO who favored Community Action over Head Start wanted a study
that would spotlight Head Start's deficiencies. Another was that the administration was
going to use the findings to justify a major cutback in Head Start. Finally, there was the fear
that “enemies of the program” in Congress would use the negative results as an excuse for
attacking it. Although there later appeared to have been little factual basis for these fears,
they were real to the proponents of Head Start and contributed to the intensity of their
assault on the evaluation study.
The methodological conflict that arose over the study focused on such standard items as
sample size, validity of the control group, and appropriateness of the tests given to the
children. An examination of these matters would be too lengthy and too technical to
include here. An assessment of the study by liberal economist Walter Williams, however,
provides a balanced view of the controversy:
In terms of its methodological and conceptual base, the study is a relatively good one.
This in no way denies that many of the criticisms made of the study are valid. However,
for the most part, they are the kinds of criticisms that can be made of most pieces of
social science research conducted outside the laboratory, in a real-world setting, with
all of the logistical and measurement problems that such studies entail. And these
methodological flaws open the door to the more political issues. Thus, one needs not
only to examine the methodological substance of the criticisms which have been made
of the study, but also to understand the social concern which lies behind them as well.
Head Start has elicited national sympathy and has had the support and involvement of
the educational profession. It is understandable that so many should rush to the
defense of such a popular and humane program. But how many of the concerns over
the size of the sample, control-group equivalency, and the appropriateness of
covariance analysis, for example, would have been registered if the study had found
positive differences in favor of Head Start? We imagine that this type of positive, but
qualified assessment will fit any relatively good evaluation for some time to come. We
have never seen a field evaluation of a social action program that could not be faulted
legitimately by good methodologists, and we may never see one.
Interestingly, the findings of the Westinghouse study were as favorable to Head Start as
were the earlier evaluations of specific projects made by Head Start officials. These, too,
showed that the program had limited lasting effects on the children. What the
Westinghouse study, and the controversy over it, did was to inject these findings into the
public arena and expand the scope of the conflict over them.
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Despite the essentially negative evaluations of its accomplishments, the Westinghouse
report recommended that Head Start be preserved and improved, at least partly on the
ground that “something must be tried here and now to help the many children of poverty
who may never be helped again.” Head Start was, and is, a politically popular program.
Congress and the
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executive have generally been favorably disposed toward the program, and it has suffered
little of the criticism directed at other aspects of the antipoverty program. Children are a
potent symbol in policy conflicts.
Ten years after the Westinghouse study was made public, the findings of another group of
researchers on the long-term effects of Head Start were published by the Department of
Health, Education, and Welfare. Based on a series of longitudinal studies, this study
concluded that Head Start had significant, long-lasting social and educational benefits for
its participants. Thus, children who had been in the program had much less need for
remedial classes, were less likely to be retained in grade, and were half as likely to drop out
of high school as were adolescents of comparable age who had not been in the program.
As a consequence, Head Start was now hailed as a success by the communications media.
Why the substantial difference in findings by the two evaluations? The explanation rests
primarily with the different methodological approaches. The Westinghouse study, using an
experimental design, focused on short-run effects, especially as measured by intelligence-
test scores. The second study focused on long-range effects.
In 1981, Head Start was designated part of President Reagan's “social safety net,” which
provided assistance to the “truly needy,” and thus was not tagged for cutbacks in funding,
as were several other programs that provided aid to poor people. In 1988, approximately
450,000 children were enrolled in Head Start, which now operated year-round, at a cost of
$1.2 billion. Only about a quarter of the eligible children were actually enrolled in the
program, however. Head Start continued to expand under subsequent administrations.
Research studies on the benefits of Head Start and early-childhood education have
continued to yield inconclusive findings. Children who go through Head Start are found to
have improved cognitive abilities, greater self-esteem, and improved social skills. On the
other hand, various studies report that gains in academic achievement are not lasting. After
a few years, when Head Start children are compared with non-Head Start children, the
educational gains fade away.
A major evaluation of Head Start published in the American Economic Review in 1995
illustrates these mixed findings. Using longitudinal data for a sample of nearly 5,000
children, the evaluators examined the impact of Head Start on cognitive achievement,
school performance (whether a child repeated one or more grades), utilization of
preventive medical care, and health and nutritional status. Children who had been enrolled
in Head Start were compared with their siblings who either had been enrolled in other
preschool programs or had had no preschool experiences.
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The evaluation found that Head Start had positive and persistent effects on the cognitive
achievement and school performance of white children. In contrast, although there were
positive effects on the cognitive achievement of African-American children, these effects
soon disappeared. No positive effects were found on the school performance of African-
American children. For both white and African-American children, Head Start had a
positive effect
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on preventive health care, as measured by measles immunization rates. For neither did it
have an impact on health and nutritional status, as measured by conformity with national
height-for-age norms.
The results of evaluation studies have not lessened the political popularity of the Head
Start program, and it has drawn bipartisan support from Congress and the executive. The
program came up for renewal in 2003. The George W. Bush administration wanted to give
the states more control over the program, to require standardized testing for four- and five-
year-old enrollees in math and reading, and to permit faith-based Head Start providers to
base hiring decisions on religious preference. These proposals drew strong opposition
from congressional Democrats and the National Head Start Association. No legislation was
passed until 2007 when Congress, now under Democratic control, was able to break the
impasse. The contested provisions were eliminated, eligibility for participation in the
program was expanded, and increased funding for the program was authorized. Also, the
legislation sought to improve the quality of Head Start teachers and to strengthen program
accountability.
Evaluations of Head Start continue to be done, and they continue collectively to yield
inconclusive or divergent results. Supporters and critics of the program alike can search
the many studies and find evidence to buttress their conclusions. Clearly, though, there is
evidence here for the belief that policy evaluation is not an exact science.
Head Start is perceived as a way to provide educational and social services to the truly
needy—children in economically distressed families. Most Head Start families have annual
incomes of less than $15,000. Perhaps, too, as many believe, the success of Head Start will
lead to future reduced expenditures for other programs—those dealing with welfare,
juvenile delinquency, and criminal justice, for example.
In 2012 Head Start had a budget of $8 billion and enrolled more than 900,000 children.
Nonetheless, hundreds of thousands of eligible children remained outside the program.
Policy Termination
As noted in the preceding section, the evaluation and appraisal of a policy, dissatisfaction
with its costs and consequences, and the development and expansion of political opposition
may produce a variety of responses to it, including termination. Policies are only one set of
targets for termination. Others are programs (e.g., the rural abandoned-mine program),
projects (e.g., the cross-Florida barge canal), and agencies. More than half of the states, for
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example, have enacted sunset laws, which require the legislature to renew periodically the
authorization for administrative agencies. If this is not done, agencies are automatically
abolished. The termination of an agency, however, may mean only that its programs are
shifted elsewhere.
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Another possibility is that an abolished agency may be replaced by one or more new
agencies. When the Interstate Commerce Commission, which had been established in 1887
to handle railroad regulation, was ended in 1997, its place was taken by the Surface
Transportation Board. By then many of the duties of the ICC had been eliminated. Following
the Deepwater Horizon disaster in April 2010, the Minerals Management Service, which
many viewed as the captive of the petroleum industry, was terminated. In its stead
appeared the Bureau of Safety and Environmental Enforcement, in charge of permits,
inspections, and safety matters; the Bureau of Ocean Energy Management, to handle
leasing, review development plans, and look after renewable energy; and the Office of
Natural Resources Revenue, to take care of financial matters.
The focus here is on policies. Most of us can readily identify a number of government
policies that we regard as wasteful, unnecessary, or inappropriate because they offend our
ideological inclinations. Others, however, may not share our beliefs and instead may view
these same policies as necessary and desirable, perhaps needing some change or
improvement, but on the whole worth keeping. Perhaps these people directly benefit from
the policies. Or their ideology may inform them that such policies are laudable uses of
governmental power. Just as most policies arise out of conflict, so too there will be
disagreement over their worth and retention.
If criticism of and opposition to a policy become sufficiently strong so that the policy-
makers feel impelled to take action, a policy is more likely to be altered than terminated. An
effort may be made to strengthen the policy to make it more effective, or portions of it that
appear especially ineffective or offensive may be pruned away. This sort of adjustment is
illustrated by the conversion of the Comprehensive Employment and Training Act of 1973
into the Job Training Partnership Act of 1982. Alterations were made in the administration
of job training, and the public-employment program was jettisoned. Several years ago, the
tobacco price-support program was separated from the general farm bill, and much of its
cost was shifted to the private sector in order to save it; but only for a while. It later bit the
dust.
Policy termination is difficult to accomplish for a number of reasons. Policies come into
being because they have political support, and they typically retain some or all of that
support. Though they may be few, the supporters of a policy or program probably will be
strongly committed to it and may intensely resist change and ignore contrary evidence. The
U.S. Army did not eliminate the horse cavalry until World War II, even though the cavalry
had been obsolete for years because of military reliance on weapons such as the machine
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gun and rapid-fire artillery. Some army officials could not comprehend an effective
fighting force without the horse cavalry, reality to the contrary. The Tea Board consisted of
three tea-tasters whose task was to ensure the quality of imported tea. Since its
establishment late in the nineteenth century, it survived several efforts to abolish it, finally
succumbing in 1996 after a U.S. senator from Nevada made its termination a personal
cause, thereby saving the government a whopping $200,000 a year.
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The critics and opponents of a policy may be less intense in their feelings and may be both
somewhat disorganized and diverse in their interests as well. It may also be quite difficult to
weld together a coalition of sufficient strength to repeal a policy. The Tea Board was like a
sitting duck. Some potential opponents of a policy may be most interested in preserving
their own favored policies, and thus an attitude of “live and let live” may prevail. An intense
minority often prevails over an indifferent majority in the democratic political process.
Within Congress, with its fragmented and dispersed power structures, those with
jurisdiction over a policy are more likely than not to be its friends and supporters. They can
then use their committee or subcommittee positions to protect the policy against attack, to
fend off or stifle unwanted changes, and to block its termination, should that be proposed.
Governmental structure favors those seeking to retain policies, just as it once favored those
opposing their enactment. There is perhaps a rough equity in this arrangement.
Termination, moreover, is a severe action with unpleasant and negative connotations. It
has an undertone of admitting failure. Unpleasant consequences may ensue when a policy
is terminated: people may suffer lost income and jobs, prices for services or products may
increase, and communities may decline. Ill will and other political costs may be entailed.
Most public officials thus prefer to be involved in creating new or better policies rather than
terminating the old.
Although these factors may make policy termination controversial and difficult, successful
termination does occasionally happen. Here are some terminated policies and their dates of
demise.
Fair-trade legislation (1975). This legislation, adopted during the 1930s, permitted
manufacturers of trademarked or brand-named products to set mandatory minimum resale
prices for their products. It was intended to help small businesses. Over the years fair trade
had become a tired, worn-out policy whose time had passed. Little support for it remained,
and it was easily repealed.
Commercial airline regulation (1978). Almost all economic (but not safety) regulation was
eliminated by the Airline Deregulation Act, the first major victory of the deregulation
movement that began in the 1970s. Many policymakers became convinced, partly as a
consequence of a multitude of policy studies, that market forces would more effectively
control the airlines and protect the interests of users than would regulation.
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Regulation of petroleum prices (1980). This policy, which always had much opposition,
came into being as a consequence of the energy crisis in the 1970s. Difficult to administer, it
was intended to prevent domestic oil companies from unduly profiting from high world oil
prices. Its elimination in preference for market prices was coupled with a windfall-profits
tax (see later discussion).
Synthetic-fuels research (1985). This policy was another product of the energy crisis. A
costly program intended to develop commercial synthetic fuels as a substitute for fossil
fuels, it had accomplished little by the time of its elimination, partly because of the length of
time needed to get complex developmental
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projects underway. By 1985, the energy crisis and memories of it had ebbed, and the Reagan
administration wanted more reliance on the market.
Revenue sharing (1986). Adopted during the Nixon administration, revenue sharing
channeled billions of dollars annually to state and local governments, with few strings
attached, partly to encourage them to be more creative in dealing with public problems.
Large federal budget deficits were the ultimate reason for its termination, although
congressional opposition to revenue sharing was always considerable.
Crude-Oil Windfall Profits Tax Act (COWPTA) (1986). Enacted in 1980, COWPTA was the
price the petroleum industry reluctantly paid for oil-price deregulation, which permitted
domestic oil prices to rise. From 30 to 70 percent of the windfall, the difference between the
selling (or market) price of oil and a specified base price, was taxed away. A phaseout of the
tax was to begin in January 1988, if $227 billion in revenue had been collected, or within
one month following the collection of that amount, but in any event, no later than January
1991.
The price of oil, however, fell in the mid-1980s, and the tax ceased to produce revenue. An
industry-supported effort to repeal the act failed in 1986. Success finally came in 1988, when
a repeal provision was included in the Omnibus Trade and Competitiveness Act to pick up
or solidify votes for that legislation. Time and events had thus made the windfall tax
symbolic and readily expendable.
Agricultural production controls (1996). Restrictions on the production of many farm
commodities had been a prominent feature of farm programs since their inception in the
early 1930s. They had long drawn criticism from Republicans, conservatives, and some farm
groups. Most production controls were terminated by the Federal Agricultural Improvement
and Reform Act (FAIR Act), also called “Freedom to Farm,” pushed through by the new
Republican majorities in Congress. However, generous subsidies to enhance farm incomes
were continued.
Glass-Steagall Act (1999). A 1935 response to the Great Depression, this act created bank
deposit insurance and provided for the separation of investment and commercial banking.
Banking deposit insurance became widely accepted; however, as the decades passed, the
separation of investment and commercial banking came under increasing attack as an
unnecessary hindrance to the financial business. Repealed in 1998, this action contributed
to the financial crisis of 2007–2009.
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Farm price support program for tobacco (2004). Put in place in 1938, the tobacco program
used marketing quotas (mandatory limits on production) and nonrecourse loans to boost
prices. Tobacco growers, worried about falling demand and lower prices for tobacco, and
anti-smoking forces long opposed to the tobacco program, advocated its demise. A ten-
billion-dollar buyout program for quota owners and tobacco growers helped gain their
support. Many of those who were bought out ceased to grow tobacco. Now anyone,
wherever located, can grow and sell as much tobacco as they choose.
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As these examples indicate, a number of factors may contribute to the termination of
policies. A short list includes ideology, the urge to economize, altered political conditions,
and clear policy failure. Systematic evaluation played a major role only in airline
deregulation. Evaluators (mostly economists) over time were able to gather substantial
evidence on the shortcomings of airline rate and route regulation and to effectively portray
market regulation as an effective and satisfactory alternative. Most commonly, however,
systematic evaluation has not been a critical element in policy termination.
Indeed, to emphasize a point made earlier, evaluation is more likely to reinitiate the policy
sequence. Problems that emerge or become more intense during the implementation of a
policy may be identified, alternatives for change or improvement may be formulated and
debated, and so on, until perhaps the policy is modified in some fashion. It is also possible,
of course, that those responsible for implementing a policy will act to make it more
acceptable to complaining groups, as by speeding up the issuance of licenses or cracking
down on certain kinds of law violations. Policy change, whether legislative or
administrative in origin, is more likely to occur than policy termination.
CASE STUDY The Policy Cycle: Airline Regulation and Deregulation
A case study of a public policy from its inception to its termination is an appropriate way to
end a discussion of the policy process. National economic regulation of commercial airline
service formally extended from 1938 to 1978, when deregulation legislation was adopted.
Other forms of government involvement with the airlines—safety and air-traffic
movement, security, airport operations, and financial assistance—continue. Laissez- faire
did not come to the airlines after 1978, nor did they want it. This case study gives the reader
an overall view of the policy cycle and an opportunity to identify and fit together the
various phases of the policy cycle. It will also contribute to an understanding of why public
policy on the airlines is what it is today, which is an interesting story in itself.
It is said that “policymaking is an extremely complex process without beginning or end.”
Complex it indeed usually is. However, one can fairly effectively date the beginning and
end of policies like that of the Civil Aeronautics Act. To comprehend commercial airline
regulation, one does not need to go back in time to Icarus's ill-fated flight or even the
activities of the Wright brothers. The 1930s will do nicely. Economic regulation of the
airlines ended with the implementation of the Airline Deregulation Act. Should
dissatisfaction with conditions under deregulation lead to the reimposition of regulation,
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that would be another chapter in airline regulation, another cycle of the policy process, and
reasonably distinct from the 1938–1978 era.
The American air-transportation industry began with the Air Mail Act of 1925, which
authorized the Post Office Department to use competitive
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bidding to award air-mail contracts to private airlines. Government payments to the
airlines often exceeded the revenue produced by air mail. Nonetheless, many airlines
suffered operating losses, and the possibility or abandonment of services arose. New
legislation increasing the level of air-mail subsidies was adopted in 1930. Because
passenger service was just beginning to catch on in the 1930s, carrying the mail continued
to be a major source of revenues for the airlines. As a consequence of the Great Depression,
by the mid-1930s, the airlines were once again in financial distress, and again there
emerged a demand for favorable government action to bail them out.
It was widely agreed among industry and governmental officials that there was a need for
new economic and safety regulation. Because it appeared that there were more airlines
than could be supported by available revenues, it was feared that unregulated competition
among the many small companies making up the industry would degenerate into
“destructive competition.” The airlines themselves were united in favor of restrictive
legislation. Between 1934 and 1938, the enactment of legislation was delayed by problems
in resolving two issues: whether regulation should be handled by the Interstate Commerce
Commission, which was the position of President Franklin Roosevelt, or by a new
independent commission, and whether the same agency should administer both economic
and safety regulation. These issues were finally resolved by the Civil Aeronautics Act of
1938, which passed Congress by substantial majorities. We will trace its history here.
The Civil Aeronautics Act, as modified by a 1940 presidential executive order, established
the Civil Aeronautics Board (CAB) to handle economic regulation and the Civil Aeronautics
Authority (CAA) in the Department of Commerce to administer safety regulation, to control
air traffic, and to maintain a national airway system of guidance systems, airports, and the
like.
In 1956, the collision of two passenger planes over the Grand Canyon led to questions
about the adequacy of air-traffic control and safety regulation. In response, Congress
enacted the Federal Aviation Act of 1958, which replaced the CAA with a new independent
agency, the Federal Aviation Administration (FAA), which was given a strengthened air-
safety mandate. The FAA later became a unit in the Department of Transportation and
continues to be responsible for air-traffic control and safety. We will not deal further with it
in this case study.
The CAB, an independent regulatory commission, was headed by a five-member board
serving six-year, staggered terms of office. Appointed by the president with senatorial
consent, no more than a majority of the board members could come from the same political
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party. The CAB was authorized to regulate entry into the commercial airline industry by the
issuance of certificates of “public convenience and necessity,” which were also used to
determine the particular routes that an air carrier could serve. The abandonment of
service also required CAB approval. Airline rates had to be “just and reasonable” and could
be changed by the CAB if it found them unjust or unreasonable because they were too high
or too low. The CAB was also
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authorized to administer air-mail payments and operating subsidies. The act
“grandfathered” the existing sixteen air trunk lines (carriers providing service between
major cities) into the business. No new trunk lines were subsequently admitted to the
industry by the CAB during the next forty years. This was often cited as a shortcoming of
the airline regulatory system.
The Civil Aeronautics Act's declaration of policy directed the CAB to use its authority to
“foster sound economic conditions” in air transportation; to promote “adequate,
economical, and efficient service by air carriers at reasonable charges”; to ensure
“competition to the extent necessary to assure the development of an air-transportation
system properly adapted to the needs of the foreign and domestic commerce of the United
States”; and, for good measure, to be concerned with the “promotion, encouragement, and
development of civil aeronautics.” Essentially, the act laid out a number of desirable
objectives and then left to the CAB the choice of which ones it would emphasize. The
agency's multiple mandate was a frequent target of critics.
Through its regulatory authority, the CAB significantly influenced the structure of the
airline industry. Several categories of carriers were developed. The trunk carriers, whose
numbers, through mergers, had been diminished to eleven by 1970, provided regularly
scheduled service between major cities and accounted for the lion's share of passenger
service. Local-service (or regional) carriers provided short-haul service between smaller
cities (such as Piedmont and Ozark), and commuter airlines, operating small planes,
provided service to places not reached by the larger carriers. The latter did not need prior
CAB approval for their route and rate decisions. There were also all-cargo and charter
airlines. A few intrastate airlines serving cities entirely within the boundaries of a single
state also existed, and these were not subject to CAB regulation. The discussion here focuses
on the trunk carriers.
During its forty years of existence, CAB regulatory policy fluctuated between pro- and
anticompetitive tendencies, depending upon the economic situation of the airlines. When
airline profits were high or “excessive,” the CAB increased competitive route awards and
encouraged the companies to reduce or discount airfares. Conversely, when profits were
low, the CAB adopted an anticompetitive stance on new route awards and encouraged or
approved fare increases to offset lower passenger traffic. Service competition—the
frequency of flights, seating arrangements, food services, and other amenities— was left
alone by the CAB. Barred from rate competition, airlines occasionally featured champagne
flights and gourmet meals in their efforts to attract passengers. Both the airlines and the
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traveling public generally found the CAB's regulatory policies to be acceptable. Airline
travel was mostly pleasant.
In the 1970s, a recession that reduced passenger traffic, rising fuel costs caused by the
energy crisis, and inflation drove down airline earnings and propelled the CAB to take a
strong anticompetitive position. A moratorium was imposed on the award of new airline
routes, and substantial rate hikes were granted. Departing from previous policy, the agency
also sought to discourage service competition. Further, a scandal erupted involving the CAB
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chair, who had accepted free trips and favors from the airlines. Collectively, these events
drew attention to the CAB; much criticism of the agency arose from both governmental and
private sources. For many people it seemed clear that the CAB was the “captive” of the
airlines, serving their interests rather than the public interest. The CAB, however, was not
as fully under the sway of the airlines as the captive charge implied.
A number of studies conducted by economists in the 1960s and 1970s concluded that the
CAB's policies protected inefficient airlines by preventing rate competition. The result was
higher costs for the traveling public than would occur in an ideal competitive situation.
This line of argument was supported, in turn, by other analyses comparing the operations
of CAB-regulated interstate carriers with those of intrastate carriers in Texas and California
that were not controlled by the CAB. The rates for the latter over similar routes were
considerably lower. Although these studies initially were generally ignored by the CAB
and others, in time, they helped make deregulation a viable alternative to the CAB's
regulatory regime.
In 1974 and 1975, airline regulation (and deregulation) reached the national policy
agenda as a consequence of two sets of circumstances. First, in 1974, Senator Edward
Kennedy (D, Massachusetts), chair of the Senate Judiciary Committee's Subcommittee on
Administrative Practice and Procedure, decided to hold hearings on CAB regulation. These
hearings, which actually took place in 1975, revealed much dissatisfaction with the CAB
and publicized the large differential between the rates of CAB-regulated and nonregulated
carriers. There was no agreement on the specific direction that reform should take,
however.
Second, in August 1974, Gerald Ford became president following the resignation of
Richard M. Nixon. A conservative Republican, Ford took office confronted by double-digit
inflation. Advised that government regulatory programs contributed to inflation by raising
business costs and prices, Ford made regulatory reform part of his anti-inflation program.
(This action also coincided with his dislike of big government.) Although there was not
much public clamor for regulatory reform per se, inflation was an issue of high public
salience. In October 1975, Ford sent an aviation regulatory reform bill to Congress that
called for reduced CAB control of the airlines.
In 1977, Jimmy Carter replaced Ford as president. Although he had not said much about it
while campaigning, Carter quickly made airline deregulation a high-priority item in his
legislative program. Rather than introduce its own bill, however, the Carter administration
chose to support legislation that was already being considered in Congress, hoping thereby
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to secure a quick and easy legislative victory. Carter officials also stressed the relationship
between regulation and inflation. (In actuality, because they constituted such a small
portion of gross domestic product, airfares set at the zero level would have had miniscule
effect on inflation.)
In the Senate, Kennedy and Howard Cannon (D, Nevada), chair of the Subcommittee on
Aviation of the Senate Commerce Committee, became the
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sponsors of a bill titled the Air Transportation Regulatory Reform Act. Not initially a
supporter of aviation regulatory reform, Cannon at first had been irritated by Kennedy's
hearings. However, he shifted his position and became a supporter of reform rather than
be left behind by the surge for reform.
The Kennedy-Cannon bill provided for increased competition in the airline industry by
making it easier for carriers to obtain authorization to serve new routes and giving them
substantial leeway in setting fares. Other provisions authorized subsidies for small-
community air service and compensation for airline employees suffering wage reductions
or unemployment because of increased competition. These provisions were designed to
counteract some of the opposition to regulatory reform, which we will discuss later in this
section. The reform legislation under consideration in the House, where there was
difficulty in getting agreement on a bill, was weaker than the Senate bill.
Supporting and opposing coalitions emerged. Among the supporters of reform were
several government agencies full of economists, including the Council on Wage and Price
Stability, the Council of Economic Advisors, the Federal Trade Commission, and the
Antitrust Division; many consumer groups; Ralph Nader; most economists; and such
conservative groups as the American Farm Bureau Federation, the National Federation of
Independent Business, and the National Association of Manufacturers. Also supporting
reform was United Airlines, which believed that it had been unfairly treated by the CAB in
its route decisions. The supporters of reform argued that greater competition would benefit
both passengers and airlines. The former would get lower fares while the greater volume of
passenger traffic these generated would yield larger profits for the airlines.
Opponents of reform comprised most of the larger scheduled airlines and their trade
organization, the Air Transportation Association; airline employees' unions; and
organizations representing the interests of airport operators and small communities.
Diverse interests drew them together. The air carriers feared that major changes in CAB
rate and route regulation would lead to “cutthroat competition” and instability in the
industry. The unions saw deregulation as a threat to job security wage levels, and their
status as employee representatives. Some airport operators were concerned that
deregulation would mean reduced business, and small communities and rural states fretted
about the possible reduction or total loss of air service.
At this point we need to pick up another facet of the deregulation story. In the course of a
few years in the mid-1970s, the CAB was transformed into a leading proponent of
deregulation. The change began with President Ford's appointment of John Robson in mid-
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1975 to chair the agency. Under Robson's leadership, the CAB began to review its regulatory
policies and to shift to a more procompetitive position. Robson also testified before
Congress concerning the need to replace the current aviation regulatory regime. This came
as a surprise to many people.
The pace of change within the CAB accelerated in June 1977 when Carter appointee Alfred
Kahn, a Cornell University economics professor, replaced
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Robson as CAB chair. He was soon joined by economist Elizabeth Bailey as a board
member. Kahn moved quickly to fill key CAB staff positions with supporters of
deregulation. Then, under his skillful direction, various actions were taken to substantially
reduce CAB control of airline rate and route decisions so as to increase competition in the
industry. For instance, it was made much easier for airlines to obtain new routes and to
initiate or terminate service on unprofitable routes at their own discretion. In all
likelihood, some of the CAB initiatives violated the Federal Aviation Act (which had
replaced the Civil Aeronautics Act). Indeed, one airline sued the CAB in federal court,
alleging that the agency had failed to meet its responsibilities under the act.
This administrative deregulation increased the odds in favor of the enactment of reform
legislation for two reasons. First, the CAB itself was rapidly implementing many of the
reforms proposed in the legislation being considered by Congress. Second, airline profits
increased in 1977 and 1978. Whether because of the CAB's policy changes or improved
economic conditions, this reduced the resistance of the airlines to regulatory reform. In
fact, their opposition largely collapsed by the end of summer 1978.
The Senate passed its version of airline regulatory reform in April 1978, but the House
was not able to complete action on its bill until September. Included in the House bill was a
provision calling for the termination of the CAB at the end of 1983. Initially included in a
substitute bill by a strong advocate of “sunset review” (the periodic evaluation of agencies
to determine whether they should be continued), it was incorporated in the final House bill
as a concession to deregulation supporters in exchange for making milder reductions in
CAB regulatory authority than in the Senate bill. In the Conference Committee, however,
the House yielded to most of the Senate's stronger reform provisions. The bill, now titled
the Airline Deregulation Act, was passed by both houses and signed into law by President
Jimmy Carter. “For the first time in decades,” he said, “we have deregulated a major
industry.”
The Airline Deregulation Act initially made it easier for airlines to enter new routes and
gave them flexibility in setting fares. It provided for continuation of “essential air
transportation service” to smaller communities, with subsidies to ensure such service, for
ten years. Compensation was authorized for a maximum of six years for airline employees
who lost their jobs, had their pay reduced, or were forced to relocate because of
competition engendered by the act. Then, what is most significant, the act set forth a
deregulation schedule. Unless Congress decided otherwise, the CAB's authority over
domestic routes would end on December 31, 1981; its authority over domestic rates and
fares would expire on January 1, 1983; and the board itself would be abolished on January
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1, 1985. Its remaining authority would then be transferred to the Departments of
Transportation and Justice and the U.S. Postal Service. All of this happened on the specified
dates.
The Airline Deregulation Act marked a basic change in public policy on commercial
airlines, a shift from detailed administrative regulations to reliance on the market and
competition to control their economic behavior. It
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ran directly counter to the theory of economic regulation, which holds that “regulation is
acquired by the industry and is designed and operated primarily for its benefit.” Although
that theory is a plausible, but not fully convincing, explanation for the Civil Aeronautics Act
of 1938, it is simply not applicable to airline deregulation (or to trucking and railroad
deregulation either, for that matter), which was strongly opposed by most of the industry
until there was little doubt that strong deregulatory legislation would be adopted.
What, then, accounts for the Airline Deregulation Act? Martha Derthick and Paul Quirk
provide a good explanation. First, there was wide support for deregulation in the
academic world and in the political sphere. “Procompetitive reform . . . proved to have a
broad appeal, engaging liberals (led by Senator Edward M. Kennedy), who stressed the
benefits of lower prices for consumers and an end to government protection of business,
and conservatives (led by President Gerald R. Ford), who stressed the benefits of reducing
the burdens of government regulation in private markets.” Second, many public officials
in leadership positions—presidents, committee chairs, CAB chairs—were advocates of
deregulation. Third, much deregulation would have occurred even had Congress not acted
because of the CAB, which, whatever its history, demonstrated in the mid-1970s that it was
not the captive of the airlines.
Fourth, strong majorities in Congress, despite the opposition of most of the airlines,
supported aviation regulatory reform. They acted not only in response to executive and
legislative leadership but also out of a desire to produce policy that responded to public
concerns about inflation and intrusive government. Fifth, economists and other policy
analysts had produced myriad studies that portrayed reliance on the market and
competition as a viable alternative to economic regulation. This was in line with the old
adage that “you can't beat something with nothing.”
Finally, the airline industry was unable to maintain a united front in opposition to major
regulatory change. First United defected. Then other airlines split off, especially as the
CAB's removal of controls accelerated. Finally, airline opposition collapsed, leaving the way
open for Congress to enact sweeping deregulation legislation.
What has happened in the airline industry since 1978? Has airline deregulation been a
success? The conventional wisdom says yes—air fares decreased initially, and competition
on air routes increased. The record, however, is not that clear. Some developments in the
airline industry and public policy are reported here. Whether they are all the direct
consequence of deregulation is uncertain.
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Following deregulation, many new airlines entered the industry, but within a few years
almost all of them had either failed or been absorbed by major airlines. In the 1990s, a
second wave of new carriers (e.g., Allegiant, Kiwi, Reno, JetBlue) entered the industry. Each,
however, accounts for a miniscule portion of airline traffic. Some of them also have failed.
The control of domestic air travel has become more oligopolistic. Most major airlines in
existence in 1978 (Braniff, Eastern, Pan American, Trans
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World, National) have vanished because of bankruptcy or merger. In 1999, the seven
largest companies carried 89 percent of air passengers. Afflicted by economic adversity,
the airlines turned to concentration through merger as the remedy for their problems.
Northwest's attempted takeover of Continental and a proposed United–U.S. Airways merger
were stymied by the Justice Department.
However, in 2008 a merger of Delta and Northwest gained Justice Department (DOJ)
approval, creating the then world's largest airline. Justice contended that it would produce
“efficiencies” that would benefit consumers and would probably not “substantially lessen
competition.” This consolidation was followed by mergers of United-Continental (2010) and
Southwest-Airtran (2011). Then, in early 2013, American Airlines proposed to merge with
U.S. Airways, which would have yielded a new world's largest airline. This proposed
merger hit a snag months later when DOJ's Antitrust Division moved to block it as anti-
competitive and not in the best interest of consumers, who had been experiencing rising
airfares and service fees since the prior mergers. The outcome of this latest merger
proposal is, therefore, uncertain. This can be said, however: the current oligopolistic airline
industry is not what the proponents of airline deregulation promised.
The hub-and-spoke system, whereby flights from many “spoke” cities converge in a single
“hub” city, has enabled one or two carriers to dominate service to and from most large
cities. Thus, most of the passenger traffic moving through Atlanta is controlled by Delta.
United dominates traffic into and out of Houston, Chicago, and Denver. Through predatory
rate-setting and provision of excess service, the airlines that dominate hub cities have been
able to drive or keep most low-cost carriers out of their markets.
The picture concerning airfares is cloudy. Controlling for the effects on inflation, one
study found that average passenger fares overall declined by nearly 25 percent between
1979 and 1989. Many variations are concealed by averages, however. For instance, fares
on long, highly traveled routes have declined whereas those on short, less-traveled routes
have increased. Passengers at major airports dominated by one or two airlines pay
substantially higher fares than do travelers leaving airports where more competition
prevails. Discount fares—such as for persons purchasing tickets fourteen to thirty days in
advance and staying over Saturday night—enable leisure travelers to fly much more
cheaply than business and other travelers who buy tickets on short notice and do not want
to spend weekends away from home. The conditions attached to discount tickets, however,
may create inconvenience for travelers.
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Service also presents a mixed view. Much air travel has taken on the ambiance of
intercity bus travel, especially for those flying in the economy or coach section. The
number of seats and flights available to travelers has decreased, and the airplanes are more
cramped and crowded. Meals on airlines are nonexistent and other amenities have been
reduced. Fees for services or privileges have multiplied. Flight times on many routes have
increased, as have delays. Several members of Congress, responding to complaints about
service and considering their personal experiences, have introduced bills providing for a
passengers' “bill of rights.” Nothing has come of these.
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Since deregulation, and despite larger subsidies for local and commuter airlines under
the Essential Air Service program (“temporary” when created in 1978), more than a
hundred small cities have lost some or all of their air service or no longer receive jet
service. Despite fears that unregulated competition might cause airlines to skimp on
costly maintenance and safety requirements, the safety of air travel appears to have
improved. A distinction here should be made between safety and security in air travel.
Some have called for a return of government regulation to address such matters as the
domination of hub cities by particular carriers, deteriorating service, and sometimes-
expensive and often-confusing airfares. Though such complaints have drawn some
congressional attention and have found a low-level place on the agenda, the political
climate has not presented a favorable setting for new regulatory programs. On the other
hand, when the declining financial situation of the airlines was exacerbated by a drop in
air travel following the September 11 terrorist attacks, Congress quickly enacted a $15
billion bailout program of grants and loans. Some of the airlines, however, continued to
have economic problems, including involvement in bankruptcy proceedings. Generally, the
financial situation of airlines remains precarious.
More than three decades after its inception, what can be said concerning the success, or
degree of success, of airline deregulation? This question presents a strong challenge for a
policy evaluator. Obviously, competition, as measured by the number of competitors, has
declined. So, also, has opportunity for choice. Beyond such concerns, what standards or
criteria should be used? Some possibilities include levels of passenger fares, quality and
convenience of service, and the economic condition and stability of the industry. How
should these standards be measured? And their values compared? The deregulatory record
does not permit easy responses to such questions. Whether airline deregulation has on
balance been satisfactory calls for judgments based on careful review of the evidence and
avoidance of ideological biases. Readers: Do you now find airline travel to be a pleasant
experience?
Is airline deregulation here to stay, especially as the number of carriers decline? What
would be required to restart the policy cycle? So far calls for “reregulation” have not
produced action. Would the development of a better, more extensive, rail passenger
system be a good alternative?
For Further Exploration
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▮ http://www.brookings.org/ The Brookings Institution, a moderate-to-liberal think tank, provides current, scholarly
policy updates and briefs on both domestic-and foreign- policy issues.
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