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Economic approaches

Economic approaches may include a cost-effectiveness analysis, cost-bene�t analysis, or risk

assessment. 

Identifying all of the long-terms and short-term costs and bene�ts can take some time.  The less you

depend on personal opinion and the more you use less subjective costs and bene�ts, the better the

analysis will be. Using a discount rate can allow you to determine future bene�ts and costs; however,

be sure not to make the discount rate a political issue. 

Introduction

This week, we will begin with an introduction to policy analysis. Policy can be done at any stage. For

this class, you will examine policies that have been in place long enough that there are enough data

available to help you do the analysis. Predictive analysis is more dif�cult, so using policy that has been

in place will help you determine how expected and unexpected consequences as well as long-term and

short-term consequences are a part of analysis.

Remember, you cannot use opinion to back opinion. If you don’t like a part of some policy, that is �ne.

You have to be able to back that with concrete facts, not just what you think or feel. Sometimes, you

may like a policy due to your political stand but �nd there are more negatives than positives or that it

will harm a larger portion of the population than it helps. That is �ne as analysis is supposed to be fact-

based rather than political opinion based.

Dimensions for Policy Analysis

The criteria used to examine the effects of the implementation of the policy over a period of time are

called the durability of the policy analysis.

Effectiveness- This tells how well the policy does what it was created to do 

Unintended consequences- This included outcomes that were not intended. 

Fairness- In order to determine fairness, the analyst must consider who pays for the policy, who

bene�ts from the policy, and whether those who pay for the policy will bene�t from it in tangible

ways.

Costs- This is measured in relation to the bene�ts provided. Someone must pay in some way. If

more money is spent in one area, less is available for others. Think about what will be cut to pay for

any increase. Bene�ts should always outweigh costs.

Feasibility- consider how possible the policy is from political, social, and economic standpoints. If it

is considered feasible, but provokes a public uproar when it is implemented, the durability is

questionable, and it may need considerable changes.

Acceptability- Acceptability is used to measure the support given by citizens. 

A SWOT (Strengths, Weaknesses, Opportunities, and Threats), analysis can help you do this kind of

analysis. A SWOT analysis allows you to identify core items in each areas.  

Policy Analysis Players

There are many policy analysis players at all levels of government.  some of the government

organizations that can be involved include the following:

The Congressional Research Service (https://www.loc.gov/crsinfo/), which shares staff with

congressional committees and Congress. 

The Government Accountability Of�ce (https://www.gao.gov/)(GAO), which is an independent

agency that works for Congress. It investigates how the federal governments spend money. 

Some special interest groups that lobby Congress.

Many government agencies such as the Food and Drug Administration (FDA) with its Of�ce of

Planning (https://www.fda.gov/aboutfda/centersof�ces/oppla/planning/default.htm), which assists

the FDA in promoting and protecting public health.

Policy Analysis

Policy analysis must weigh evidence against opinion. This may make it dif�cult for those who cannot

separate the two. In addition to the numbers of citizens who are helped and harmed, it is important to

include other things, such as giving special thought to long-term consequences and unintended

consequences as well as short-term consequences.

Policy analysis requires the individual to identify options, compare options, examine everything from

multiple perspectives, and determine possible outcomes. Subject matter experts, citizens, and

economists can all help with the undertaking of concepts analyzation.  

There are steps that must be taken to do this well.

Identify possible options. There are often more than just two. Don’t let yourself be swayed by

fallacies, such as false choice, straw man, red herring, and begging the question (circular

reasoning). 

Describe each policy, including who will be affected (both positively and negatively) and how they

will be affected.

Examine the context.

Make sure you are examining like things if you decide to do comparisons.

Examine the costs and bene�ts to each group affected.

Determine which option is the best for the majority of the people. If your concern is not for the

majority, consider why not. Determine whether the majority of the population will be harmed.

Policy analysis plays an important part in any of the steps of policy creation and implementation. Well-

done analysis guides the decision-making process, so the �nal result is a policy that is effective and as

ef�cient and fair as possible. It can also be used during the implementation process to assist with a

smoother and more ef�cient implementation. Policy analysis can help policy makers �nd �aws so that

the policy can be improved.

Chambers, (2000, p.71) recommended the careful detailing of goals and objectives, forms of bene�ts

or services delivered, eligibility rules, �nancing, and the structure for service delivery.

References AIPAC America's Pro-Israel Lobby. (2020). Issues. Retrieved from https://www.aipac.org/learn/issues

Chambers, D. E. (2000). Social policy and social programs: A method for the practical public policy analyst. Boston: Allyn & Bacon.

Centers for Disease Control. (2021). Policy Analysis Retrieved June 15,2021, from https://www.cdc.gov/policy/polaris/policyprocess/policyanalysis/index.html.

Dobelstein, A. W. (2002). Social welfare: Policy and analysis. Pacific Grove, CA: Brooks/Cole.

Gilbert, N., & Terrell, P. (2002). Dimensions of social welfare policy. Boston: Allyn & Bacon.

Kraft, M. E., & Furlong, S.R. (2013). Public Policy: Politics, Analysis, and Alternatives. 4th Edition. Los Angeles: Sage Publications.

Popple, P., & Leighninger, L. (2004). The policy-based profession: An introduction to social welfare policy analysis for social workers. Boston: Allyn & Bacon.

Program Evaluation Strategies to Facilitate Agencies’ Use of Evaluation in Program Management and Policy Making (Rep. No. GAO - 13 - 570). (2013). Report to Congressional Committees June 2013 Retrieved from http://www.gao.gov/assets/660/655518.pdf

U.S. Center for Disease Control and Prevention. (n.d.) Policy Analysis. Retrieved June 23, 2021, from https://www.cdc.gov/policy/polaris/policyprocess/policyanalysis/index.html

U.S. Food and Drug Administration. (July 18, 2019). Office of Planning. Retrieved from https://www.fda.gov/aboutfda/centersoffices/oppla/planning/default.htm

U.S. Government Accountability Office (GAO). (July 18, 2019). Program Evaluation: Annual Agency-Wide Plans Could Enhance Leadership Support for Program Evaluations. Retrieved from https://www.gao.gov/products/GAO-17-743

U.S. Government Accountability Office (GAO). (2021). Retrieved from https://www.gao.gov/

U.S. Library of Congress. Congressional Research Service Careers. (2021). from http://www.loc.gov/crsinfo/

Steps in Policy Analysis

Select each item to learn more.

Open All Panels

Determine what the issue is and analyze it. Consider how it occurred and what its causes were. Determine how important it is to the public as

a whole and whether or not it is up to the government to provide solutions or other actions to lessen the e�ects of the problem. Be sure you

have solid evidence about these things before presenting it. If the de�nition of the problem becomes politicized, it is likely that each side will

have studies to support its argument. Dueling experts can be an issue.

Step 1: Define and Analyze the Problem

The next step is to construct policy alternatives. Think about realistic options. This could include modifying a current policy or creating a

di�erent one. Consider modi�cations that might be available, such as stronger enforcement or penalties.

Step 2: Construct Policy Alternatives

In the third step, the analyst determines what course of action is most suitable when considering fairness, e�ciency, and e�ectiveness. Also

think about what is most feasible and acceptable. Examine the cost, the unintended consequences and the sustainability.

An example of the use of poor criteria occurred during the Dot-com boom and bust in California. New technology had been building. New

companies expanded. Online retailing became the place for growth. People invested and stock values grew. During that time, California had

a large amount of tax money that hadn’t been allocated to speci�c programs. Instead of paying o� debt and creating a “rainy day” fund, the

state instituted many new entitlement programs that relied on the continued dot-com boom. When the dot-com bubble burst, the

entitlement programs continued but there was no longer the money to pay for them. This was a big issue with sustainability.

For an example of some of those standards, see the General Accounting O�ce’s Report to Congressional Committees on Program Evaluation

 .

Step 3: Develop Evaluative Criteria

Next you need to determine which alternative is the most likely to have the desired outcomes. Use evidence to determine this rather than

opinions about what you would like to see. The best alternative may involve more compromise or trade-o�s. Summarize the �ndings about

the merits of the proposals considered.

Step 4: Assess Policy Alternatives

Conclusion

When doing policy analysis, be sure to include all the basic steps, including de�ning the problem,

constructing alternatives, evaluating evaluative criteria, assessing alternatives, and drawing

conclusions.

Government agencies, special interest groups, and think tanks all do policy analysis.

While a well-analyzed policy can be long-lasting and effective, one that is created quickly and without

proper thought can result in great failures.

POLICY

ANALYSIS

The Federal Emergency Management Agency: Floods, Failures, and Federalism NOVEMBER 18, 2014 • POLICY ANALYSIS NO. 764

By Chris Edwards

T he Federal Emergency Management Agency (FEMA) is

the lead federal agency for disaster preparedness,

response, and relief. FEMA’s budget fluctuates from

year to year, but spending has trended sharply upwards in

recent decades. The agency spent $22 billion in fiscal 2013 and

$10 billion in fiscal 2014. The main activity of FEMA is

distributing aid to individuals and state and local governments

after natural disasters, such as hurricanes, floods, and

earthquakes. In addition, the agency provides ongoing grants to

the states for disaster preparedness, and it operates the

National Flood Insurance Program (NFIP).

FEMA’s response to some major disasters has been slow, disorganized, and

profligate. The agency’s actions have sometimes been harmful, such as

when it has blocked the relief efforts of other organizations. FEMA’s dismal

response to Hurricane Katrina in 2005 dramatized the agency’s

bureaucratic dysfunction. FEMA’s grants for disaster preparedness are

known for wastefulness. As for the NFIP, its insurance subsidies are

spurring development in flood‐ prone areas, which in turn is increasing the

damage caused by floods. The NFIP also encourages an expansion of

federal regulatory control over local land‐ use planning.

Federalism is supposed to undergird America’s system of handling

disasters, particularly natural disasters. State, local, and private

organizations should play the dominant role. Looking at American history,

many disasters have generated large outpourings of aid by individuals,

businesses, and charitable groups.

Today, however, growing federal intervention is undermining the role of

private institutions and the states in handling disasters. Policymakers

should reverse course and begin cutting FEMA. Ultimately, the agency

should be closed down by ending aid programs for disaster preparedness

and relief and privatizing flood insurance.

ABOUT THE AUTHOR

Chris Edwards Kilts Family Chair in Fiscal Studies