Analyzing Public Policy

Topics: Welfare economics, Decision theory, Risk Pages: 4 (1400 words) Published: April 7, 2014
​Policy analysis is introduced by Munger with immediate skepticism. Munger recognizes the influence of differing opinions, and notes a reoccurring theme of oversimplifying political issues. There is a demand from political leaders for quick solutions; however policy analysis cannot provide quick alternative recommendations. Munger credits this inability to consequently create a natural conflict between elected officials and policy experts. ​Munger presents a cautious process for analyzing policy. In the initial stage of analysis you must ensure you acknowledge the entire spectrum of the issue rather than isolating a single problem. The criteria for a policy should account for all political opinions, and clearly address all contributors to the problem. It is also helpful to receive input from politicians in the early phases of formulating a policy or alternatives; this measure helps to account for political constraints in the latter stages of policy implementation. As introduced by Munger, the market serves as a “benchmark” for measuring the performance of a policy. Munger also outlines intuitive preconditions for market existence, and more importantly three benefits of a market. Gains from trade inside a market will result in improved welfare for all participants. Markets also allow for “productive efficiency”, or specialization, resulting in economic growth. Lastly benefitting from the market system is the advantage of improved communication, resulting in cheaper transaction costs for material. Along with introducing the definition of a market, Munger covers an area titled “Value Neutral” in his book. This concept was one that captured the key objective in policy analysis: efficiency. While advantages of a Value Neutral focus are produced, a value neutral focus fails to rationale on the premise of only focusing on a market efficient approach. Rather than considering areas outside the spectrum of economic interests, only market benefits are sought. Munger even...
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