Term 1: Design, Implementation, Policy Success, Theories, Externalities, and Energy Policy, Quizzes of Public Policy

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TERM 1 Design and Implementation: Top-Down Approaches DEFINITION 1 Starts from the goals at the top, often single dominant programs TERM 2 Design and Implementation: Bottom-Up Approaches DEFINITION 2 Considers the motivations and abilities of those at the lowest levels, no single dominant program TERM 3 Policy Success DEFINITION 3 According to Goggin and colleages, successful design and implementation involves: Clear messages sent by credible officials and received by receptive implementers who have or are given sufficient resources and who implement policies supported by affected groups lead to implementation success TERM 4 Theories of the Policy Process: Institutional Theories DEFINITION 4 Institutions are crucial to understand the functioning of the public sector and policy making TERM 5 Theories of the Policy Process: Group Theories DEFINITION 5 Policies are the product of a continuous struggle among groups TERM 6 Theories of the Policy Process: Elite Theories DEFINITION 6 Policies are the product of the values and preferences of the elites TERM 7 Bounded Rationality Approaches DEFINITION 7 Focues is on limits on rationality, or issues of attention and information processing TERM 8 Systems Theories DEFINITION 8 Political systems respond to demands (inputs) from the environment such as public opinion and interest groups.Larger economic, social and cultural contexts are emphasized TERM 9 Commonly Made Assumptions About Behavior DEFINITION 9 Individuals seek to maximize their UTILITY Firms seek to maximize PROFIT Underlying assumption is that individuals make RATIONAL DECISIONS to maximize their welfare TERM 10 Opportunity Costs DEFINITION 10 The cost associated with forgoing one's next best alternative or what we give up in order to carry out an activity TERM 21 Private Responses to Externalities DEFINITION 21 Assign property rights Mergers Social Conventions TERM 22 Public Responses to Externalities DEFINITION 22 Taxes/Subsidies Create a Market Regulation TERM 23 Coase's Conjecture DEFINITION 23 Impose clearly and exclusively defined property rights Transactions costs and enforcement costs are low or non- existant If these two conditions are met, then an efficient outcome can result through bargaining TERM 24 Collective Action Problems: Private Solutions DEFINITION 24 Communication Establishing Trust Contracts, Retribution Repeated Game Assigning rights if needed TERM 25 Collective Action Problems: Public Solutions DEFINITION 25 Regulation Taxation/Subsidies Government Provision Privatize Selective Incentives TERM 26 Narrow Goals of Policies DEFINITION 26 Policies may often seek more narrow goals (which are easier to measure!) than overall well-being TERM 27 Use of Proxies DEFINITION 27 We cannot always measure the exact "utility" that economists theorize about, so we use proxies or approximations such as indicators of happiness, satisfaction, etc TERM 28 Human Development Index (Countries) DEFINITION 28 Index constructed by combining separate measures of: life expectancy, literacy, enrollment in primary, secondary and tertiary levels, and GDP per capita TERM 29 World Values Survey DEFINITION 29 Measures the happiness, "Taking all things together, would you say you are: very happy, quite happy, etc" TERM 30 Gallup Poll DEFINITION 30 "Please imagine a ladder with the steps from zero to ten, if the higher the step, the best possible life, on which step of the ladder do you feel you stand?" TERM 31 Efficiency DEFINITION 31 According to Wheelan: "We can create indicators that are reasonable proxies for outcomes we care about. We can evaluate policies based on objective criteria, such as efficiency" "The degree to which resources are used to generate the most productive outcome" (Wheelan) "Getting the most output for a given input" (Stone) "Least cost for a given benefit or largest benefit for a given cost" (Kraft and Furlong) TERM 32 Pareto-Efficient DEFINITION 32 When is it not possible to make any individual better off without making another individual worse off TERM 33 Deadweight Loss DEFINITION 33 The losers lose more than the winners win TERM 34 Equity DEFINITION 34 A measure of fairness of a policy TERM 35 Horizontal Equity DEFINITION 35 Similar people treated equally TERM 46 Individual and Aggregate Demand Curves: Shifts DEFINITION 46 Income rises--Demand shifts up Price of compliment falls--Demand shifts up Price of substitute falls--Demand shifts down TERM 47 Supply Curve DEFINITION 47 Shows the quantity supplied at each possible price There is no "law of supply" since supply curves can be much more varied than demand curves Supply curves can shift if the government imposes more rules or price of an input goes down TERM 48 Price Takers DEFINITION 48 No consumer can unduly influence the market TERM 49 Low Entry and Exit Barriers DEFINITION 49 Relatively easy for producers to enter market TERM 50 Homogenous Products DEFINITION 50 Products do not vary across producers TERM 51 Full Information DEFINITION 51 Full disclosure on price and quality TERM 52 Low Transaction Costs DEFINITION 52 Costs of trading are low TERM 53 Price Elasticity of Demand DEFINITION 53 Percent change in demand associated with a given percentage change in price SEE CALCULATION PROCESS! TERM 54 Productivity DEFINITION 54 According to Wheelan: "Productivity is a measure of output relative to inputs" "The richest societies are those that have the greatest output of goods and services relative to the inputs required to produce them" "Productivity is the single most important determinant of our standard of living"