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					Policy Evaluation

     Chapter 7
   Chapters 16-17
   Barnett (1993)
              Evaluating
            Public Programs
• Evaluating public programs involves:
  – cataloging the goals of the program
  – measuring the extent to which goals are
    achieved in an efficient and ethical manner
  – suggesting changes that may bring
    performance more in line with the goals of the
    program



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            Goal Specification and
                Goal Change
• The legislation establishing a program should be
  a source of goal statements. However:
  – Legislation is frequently written in vague language.
  – It is often difficult to attach readily quantifiable goals.
  – Goals specified in legislation may be impossible or
    contradictory.
  – Internal political dynamics can become particularly
    important in the absence of clear goals.
  – Contradictions in goals may also exist across
    organizations in government


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               Political Context
• Evaluations of public programs are performed in a
  political context.
• Political leaders may be interested only in those benefits
  created for their constituents and may disregard overall
  program effectiveness.
• A program may be evaluated only to validate decisions
  that have already been made—evaluators are often
  called upon to do ―quick and dirty‖ evaluations.
• Institutional evaluators are therefore important because
  they are relatively impartial and stable in their
  evaluations.


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          Cost-Benefit Analysis:
               Introduction
• Fundamental principle of cost-benefit analysis:
  any project undertaken should produce a benefit
  for society greater than its cost:
  – When several projects to yield net positive benefits
    and when all cannot be undertaken because of limited
    resources, the project that creates the greatest net
    benefit to society should be selected.
• Cost-benefit analysis is most applicable to
  capital projects:
  – can be applied to other projects

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         Cost-Benefit Analysis:
              Introduction
• Cost-benefit analysis has a utilitarian bias:
  – cost-benefit analysis uses a single referent:
    money
  – total wealth is the most important
• Cost-benefit analysis the advantage of
  reducing all costs and benefits of public
  programs to a single dimension.


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 Principles of Cost-Benefit Analysis
• Cost-benefit analysis is little more than a
  systematic framework within which to
  collect data concerning the merits and
  demerits of a public program:
  – enumerates positive and negative features
  – attaches a monetary value to each
  – net balance of costs and benefits will then
    determine if the program is economically
    feasible

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Principles of Cost-Benefit Analysis
• Cost-benefit analysis has conceptual
  foundations in welfare economics:
  – One of the first welfare criteria of this sort was
    the Pareto principle:
     • The Pareto principle suggests that a policy change
       is optimal if no move away from it could be made
       to benefit someone without hurting someone else.
     • An optimal policy move is one that benefits at least
       one person without hurting anyone.


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 Principles of Cost-Benefit Analysis
• A substitute to the Pareto principle is
  advanced by Nicholas Kaldor and John
  Hicks:
  – Kaldor and Hicks argued that a policy change
    is justified if the winners can compensate the
    losers and still have something left over for
    themselves:
     • This does not imply that the winners will
       necessarily compensate the losers, but it does
       suggest that the society as a whole would be
       better off if the action were taken.

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 Principles of Cost-Benefit Analysis
• Opportunity Costs:
  – Resources used in one project may not be used in
    another.
  – Projects must be evaluated against other possible
    projects to determine the best use of resources.
  – The possibility of taking no action must be
    considered.
• The analyst employing cost-benefit analysis
  must also be concerned with:
  – the remoteness of effects; and
  – the point at which he or she disregards effects as
    being too remote for consideration
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 Principles of Cost-Benefit Analysis
• The role of time:
  – Costs and benefits may accrue over a number
    of years.
  – The costs and benefits of projects must be
    converted to present values.
  – Future costs and benefits are therefore
    ―discounted‖ as a part of this process.




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   Doing Cost-Benefit Analysis
• Determining costs and benefits:
  – All costs and benefits should be enumerated.
  – Unlike private-sector projects, public projects
    require an explicit statement of the social, or
    external, costs and benefits.
     • The government is expected to consider factors
       external to the immediate costs and benefits, such
       as pollution or the loss of natural beauty.
  – The values of costs and benefits are
    computed in exclusively economic terms
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             Assigning Value
• Estimating costs and benefits is made
  difficult by the fact that we cannot directly
  measure them through the market, so we
  must use alternative methods:
  – These methods can be based on willingness
    to pay:
     • use surveys of those affected by the policy
     • measurements of actual behavior


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            Assigning Value
• Assigning value to human life:
  – The life of an individual is worth whatever the
    individual could have earned in the course of
    his or her working life, discounted to present
    value.
  – Another method utilizes the size of awards to
    plaintiffs in legal cases of negligence or
    malpractice that resulted in the loss of life.


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     Criticism and Modification
• Cost-benefit analysis gives little attention to the
  distributive questions involved in all policies:
   – All benefits and costs are counted equally, regardless
     of who receives them.
• Kaldor-Hicks payoffs rarely occur.
• The utilitarian and ―econocratic‖ foundations of
  cost-benefit analysis may not be entirely suitable
  for a functioning political democracy.
   – Political values may supersede purely economic
     values.

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     Criticism and Modification
• Is cost-benefit analysis ―nonsense on stilts‖?
• Are there too many assumptions and
  ponderables?
• Is it used to avoid important and difficult political
  questions?
• Cost-benefit analysis is most appropriately used
  in concert with other forms of analysis, including
  ethical analysis, and sound political judgment.


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       The Death Penalty:
 Cost-Benefit Analysis (for 1 year)
• Assume Current Legal System
• Assume Hypothetical State
  – Death row total: 100 per year
  – Executions: 1 per year
  – State population: 6 million




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     ―Costs‖ of Death Penalty
• Appeals (100 per year)
• Execution costs (doctors, guards, other
  staff, burial)
• Value of executed inmate’s life
  – If innocent
  – If guilty
• Grief of relatives/friends?
• Racial inequality?
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   ―Benefits‖ of Death Penalty
• Savings from removing inmate from death
  row (How many more inmates would be in
  prison if no death penalty?)
• Deterrent effect?
• Satisfaction to victim’s family?
• Satisfaction to citizens?



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