Tuesday, November 15, 2011

Policy Paradox and Homelessness

This week we aren't discussing any new theoretical topics, instead we are reviewing some of what we learned from Stone and seeing how you would use Stone's point of view to analyze policy debates. This is a transition into the week after Thanksgiving when we will briefly cover Cost Benefit and Ethical Analysis. Policy analysis is the topic for PAF 471, which will be offered next semester so if you enjoy these topics and want to learn more, I would recommend registering for the course.

In Policy Paradox in Action, Deborah Stone analyzes the history and discourse surrounding Affirmative Action using the framework she presents in this book. She illustrates how you can use the critiques she provides to critically examine policy evidence and argument. She points out where she is using each critique in her analysis. You'll notice that we didn't cover all of the goals, problems, and solutions she discusses. I hope that if you are interested in learning more about what we had to skip that you will at least go back and skim the relevant chapters.

In some ways, this may seem like another substantive chapter about Affirmative Action. While I'm happy that this is an opportunity to learn a little more about the topic, that's not what I want you to take away from this reading. I want you to see that you can combine discussions of goals, problem definition, and policy tools to think critically about public policies, legislation, and implementation. As we'll discuss in two weeks, this does not mean that statistical and cost benefit analysis do not provide valuable insight into our public policy choices. All that I ask (and that I believe Stone asks) is that you approach these analyses skeptically, engage with their methods, and question the possible agenda of those who are conducting them. After thinking critically about them, you can decide for yourself how valuable each analysis is and how close it comes to representing "the truth".

As I mentioned on Twitter, one of the challenges for this week is to read the Housing the Homeless chapter and watch the Street Vets documentary using Stone's critical lens. This chapter was chosen for this week because so many of the issues we are debating in homelessness policy have to do with the questions Stone's book challenges us to think about. Most importantly, the question of numbers and defining who to count as homeless is a major one giving the changing face of "housing insecurity" in the current recession. The chapter also raises the question of using veterans as a synecdoche for the problem of homelessness, given the changing nature of the problem. We have stories about inadvertent (PTSD), accidental (temporary job loss), and mechanical (recessionary effects, lack of mental health and substance abuse treatment) causes. We also have a variety of policy solutions that make very different assumptions about their target populations.  Were you able to read this chapter without being influenced by Stone's critical viewpoint? How do you think the debates presented in the chapter held up to Stone's scrutiny? Did you see other elements associated with the polis in the chapter?

Tuesday, November 8, 2011

My Thoughts on Inducements and Policy Paradox in Action

The fourth section in Stone's book deals with solutions to policy problems. Stone lists five possible solutions: inducements, rules, facts, rights, and powers. Sometimes we refer to these solutions as policy instruments or policy tools. They serve as the mechanisms through which government or the community exerts its power on individuals to change their behavior. I chose to assign chapter 11 on inducements rather than one of the other chapters because inducements tend to be our preferred tool in American public policy.

Inducements are the common strategy of rewarding preferred behaviors and penalizing undesired actions. Sanctions and incentives are two-sides of the same coin. They allow the individual to choose his or her behavior but seek to alter the anticipated rewards or penalties for carrying out that behavior. The removal a sanction for good behavior or an incentive for bad behavior illustrates the inter-related nature of sanctions and incentives. This is especially true when we consider research in behavioral economics. Studies have shown that we feel a loss much more sharply than we feel a lack of gain. In other words, you would feel worse about a salary reduction of $300 a month than you would feel about not getting a raise of $300 a month even though they are numerically equivalent.

Inducements are based on the understanding of human behavior characteristic of economics. It assumes that individuals are rational, that they know what will make them happy, and that they act to maximize their happiness. In order for inducements to work individuals must have control over their behavior, they must know about the possible penalty or reward, and they must be able to change their course of action. When inducements are used to act on a group or another collective entity, these assumptions usually fail. At the vary least, it makes the rational decision-making process more difficult. Inducements must be designed differently in these cases to account for the processes of group decision-making in a particular context.

Inducements are also affected by time. It is rare for an incentive or sanction to be delivered immediately after a good or bad action occurs. Even when we can deliver such an inducement, it always occurs after the act. Individuals or groups must be able to anticipate such inducements before they carry out a behavior. Many of our financial incentives and sanctions are delivered through the tax code. This creates a gap in time of up to a year from when the behavior occurs to when the inducement is delivered. If individuals or groups do not believe they will personally have to deal with long-term penalties or receive long-term benefits, then the inducement will be ineffective.

Inducements tend to imply purposeful action. They may try to alter actions with either intentional or inadvertent causes, but they do little to alter mechanical or accidental causes over which individuals have no control. This is why causal stories can be very important. If you want to benefit or burden a group using inducements you have to be able to tell a story about purposeful actions. Although not assigned for this class, the documentary and book, Freakonomics tells a story about the use of monetary inducements to encourage students in a high school to improve their grades. The program seems to work for some students but does not for most of them. This is a common story in public policy. Any time we use a policy tool, particularly inducements to alter behavior we have three groups. We have a group who will always do the desired behavior, a group that will never do the desired behavior, and a group that will change its behavior in response to the right inducement. This group is called the marginal group. Designing a good inducement is difficult because we have to decide the correct value of the inducement and target it to the changeable group. This can bring up a tension between efficiency and equity. It would be more equitable to ensure that everyone who performs a good behavior is rewarded with an incentive, but it is not efficient to reward the group who would perform a good behavior without an incentive.

Although positive and negative inducements are two-sides of the same coin, they can have different effects in the polis. Positive inducements help communities to build trust, goodwill, and cooperation while negative inducements can create conflicts and divisions. Rewards build upon a shared sacrifice. The giver gives up the reward and the receiver gives up his or her desired behavior. Sanctions result in one or both parties experiencing a cost or loss. Of course, we must remember that whether rewards or sanctions are offered, they are both based on an unequal power relationship where one group or individual is able to change the behavior of another.

The design of inducements in the polis is an art. Large positive incentives can lead to excessive competition and even cheating. Large negative sanctions can lead to a reluctance to enforce them. Sanctions or rewards that require a lot of effort on behalf of the giver are often not carried out. Incentives and sanctions can easily become guarantees when the giver is perceived as having little will or power to remove them. When the giver and receiver are very different, there may be a misunderstanding about what type of incentive or sanction will change behavior. Symbolic understandings of need come into play because behaviors that are tied to identity are often impossible to change.

Of course, no inducement operates in isolation. Individuals and groups are motivated by their own desires, but also by inducements imposed by government, business, friends, family, colleagues etc. Even if we accept the assumption that humans are calculating and weigh costs and benefits before they act, an inducement instituted through the policy process is only one small influence on behavior. This is especially true when individuals can adapt their behavior to strategically avoid the consequences of a sanction or reap the rewards of an incentive when it is not really deserved. Going back to the Freakonomics example, if we targeted our incentive only to those students who were able to bring their grades up from a D or F to an A or B, we may see a group of formerly A or B students whose grades drop significantly so they can later receive the incentive for bringing their grades back up to A's or B's. We often refer to this as a perverse incentive, but it is really a consequence of individual rational choice and adaptability.

My Thoughts on Energy and the Environment

I want to preface this week's post by saying that energy and environmental policy is not my area of expertise. In fact, out of all the policy topics we are discussing this semester, it is the area where I have done the least substantive work. That being said, I think it is incredibly important. I will not be able to add much substantive information to what Peters, the podcast, and the documentary have presented, but I can use my expertise in the policy process to explain why policymaking in the environmental arena is so challenging.

First, I want to call us back to chapter three. In this chapter, Peters talks briefly about wicked problems as areas where the Advocacy Coalition Framework is particularly useful. A wicked problem is a problem that is impossible to solve because of a lack of information, contradictory demands, and complexity. I believe that environmental problems may be the most wicked of problems that policymakers and analysts face. It is impossible to separate the environment from energy use, the economy, and most essentially, our values and way of life. I think that the documentary  Heat makes it clear that an American way of life as an ideal for citizens of developing countries is completely unsustainable. Further, humans are very bad at long-range thinking, and even worse at making decisions that will benefit us in the long-run but cause inconvenience in the short-run. In theory, we'd all rather engage in a small inconvenience now if it means avoiding a catastrophic outcome later, but in reality that's not what we choose.  It is hard for us to cognitively accept the idea that the future will realistically be radically worse than the present. There have been many psychological and behavioral economics studies detailing this point.

Economic principles like the collective action problem are rampant in environmental policy. Business interests who have been very profitable in the context of the status quo have huge incentives to fight regulations that will immediately affect their bottom line. On the other hand, most citizens will only see diffuse benefits of environmental regulation, spread out over the whole population. Further, these benefits may not be seen immediately and may not be measurable at all. We do not take note when an environmental disaster does not occur only when it does. Measuring the success of environmental policy is nearly impossible because it so often means that something does not happen.

Environmental policy tends to be reactive. When a huge disaster like the BP oil spill, Exxon Valdez, or the failure of the nuclear plants in Japan after the earthquakes takes place we tend to try to take action immediately. Instances like these and Silver Spring lead to reactive environmental policies that try to prevent similar accidents from happening again. On the other hand, issues like global warming which do not lead to immediate and visible accidents but instead act as a contributory cause to many disperse problems become increasingly difficult to deal with from a policy standpoint. They are also easier to deny because they force us to rely on scientific expertise rather than our own experiences of the world. This becomes clear in a This American Life podcast, Act Two of Kid Politics (not assigned) where a leading scientist who studies climate change attempts to change the mind of a high-schooler who is a climate change skeptic.

Ultimately, solving our environmental problems becomes difficult for policymakers because neither of the two approaches work very well. Conservation as proposed by Jimmy Carter requires action on the part of citizens, residents and businesses. Once again we have a classic collective action problem. The benefits of conservation only accrue if substantial numbers of people engage in it. This leads to a free-rider problem where those who do not engage in conservation also see the benefits. The problem is that there are incentives for everyone to be a free-rider causing conservation to fail. Of course government could step in and create economic incentives for conservation like "cash for clunkers" which subsidized the purchase of more fuel efficient vehicles for those scrapping older less efficient vehicles. On the other hand, finding more energy sources may work in the short-run, but ultimately fossil fuels are limited, nuclear power is politically unpopular, and none of our renewable sources can come close to a substitution for fossil fuels. Here too, government can step in with more funding for research and development of new technologies and subsidize the use of hydro-power, wind power, and solar power. Of course, as the ethanol experiment has shown, subsidizing these forms of power may create undesirable unintended consequences.

One of the issues with Peters' book is that this chapter was likely written before fracking aka hydraulic fracturing became a visible problem. Peters' section on natural gas section is very short and provides little substantive information. There is a lot of information about this process from a variety of sources, but the documentary "Gasland" seems to be one of the best sources in terms of explaining the fracking risk.

Wednesday, November 2, 2011

The Cause of Our Discontent

So far, we have read about two types of problem definition in the polis: symbols and numbers. Generally, the numbers and symbols we use to make a policy argument are meant to tell, or at least imply, a causal story. When we are unhappy with the status quo, particularly when we feel that things have gone very wrong, our "nature" as humans is to try to find the cause. Quite a bit of our recent politicking has been consumed by the so-called "blame game" in which one politician attempts to claim the other is responsible for the problems we face. We see this phenomenon now, with Democrats blaming the economic crash on the trend of Wall Street deregulation and Republicans blaming the Community Reinvestment Act, Fannie Mae, and Freddie Mac. Like most problems in the polis, the "true" cause is likely attributed to all of these, plus many other contributory factors, some of which could have at least been partially mediated by policy and others which were out of government's control.

Turning to this week's substantive reading and documentary, another recent instance where things went horribly wrong was the 2005 response to hurricane Katrina. We can establish certain facts about what happened in this case. On  August 29th, 2005 Katrina, a category 3 hurricane, hit the southeastern Louisiana coast. New Orleans, LA a southern city, built below sea-level, with large low-income and African American populations was in the path of the hurricane. New Orleans was (and is today) protected from storm surges by a series of levees built by the Army Corps of Engineers. One day prior to landfall, the Mayor of New Orleans ordered a mandatory evacuation of the city. After the storm hit, the levee system failed causing areas of the city of New Orleans, many of them historically Black and lower income, to flood. Thousands of residents who had not left the city were stranded in flooded homes and neighborhoods for days. Those who had evacuated to the Superdome and Convention Center faced overcrowding and resource shortages. Aid from local, state, and federal governments was slow to arrive, and much of the food and water aid did not arrive until seven days after the hurricane hit. Over 700 New Orleans residents lost their lives in the flood and hundreds of  thousands were displaced. An estimated 100,000 have yet to return home. The government response to hurricane Katrina has generally been considered a complete failure. Controversy over who is to blame and for what, continues even today.

In her chapter on causes, Stone presents four general types of causes: accidental, mechanical, inadvertent, and intentional. We have seen arguments for all of these causes in the Hurricane Katrina disaster. Least satisfying, and least likely to be true, is the accidental cause argument. Basically, this argument would posit that a hurricane is a force of nature and no one could have anticipated or predicted what the effects of such a hurricane could be. Alternatively, one could argue that even with complete preparation and "mitigation", the levees would have failed and people would have lost their lives. In other words, what happened was out of anyone's control. I believe that evidence from the documentary and the reading shows that this explanation is incorrect in this case.

We often see the argument that FEMA's response was ineffective due to mechanical causes. The federalist system required the state and local government to authorize a federal response, and such a response was never received by the federal government from the state of Louisiana. Of course, state and local officials vehemently dispute this fact. Many have also argued that the reorganization of FEMA into the Department of Homeland Security caused the agency to lose a substantial number of highly-trained experts and funding for disaster response. The employees of FEMA were, in this story, doing their job to the best of their ability, but were hampered by systemic issues. A similar story has been told about the National Guard response to Katrina. There is more about both of these mechanical explanations in the reading and documentary.

There is also an inadvertent story at play in the Katrina story. Many have argued that the people of New Orleans would have left the city if they could but were either uninformed or unable to do so. Many lacked correct information about flood zones and the likelihood that the levees would burst. Public transportation out of the city was lacking. By the time the evacuation order was issued, it was too late for many to coordinate sufficient transportation. There may also have been an unwillingness to believe that this was "the one" or that their usual hurricane preparations would be inadequate. Some argue that the existence of government emergency response agencies was itself an inadvertent cause of the devastation, creating a false sense of security among those affected.

Finally, we heard a substantial number of intentional causal explanations for the devastation caused by Katrina and the botched government efforts to return residents to the city after the storm. As Kanye West famously stated in the televised fundraiser for Katrina relief, "George Bush doesn't care about black people." This sentiment underlies many of the arguments that the devastation caused by the hurricane was intentional. Some believed that the levees were purposely blown to flood low-income neighborhoods and preserve wealthier white New Orleans neighborhoods. Many believe that the bureaucratic red tape surrounding the Road Home program was created to keep poor African American former residents from returning home. Stories of intentional causation are sometimes labeled "conspiracy theories". While they are often untrue, the tobacco settlement discussed by Stone illustrates that some conspiracy theories contain at least a degree of truth. If you have not seen the film "The Insider", it is worth a watch to see how an intentional causal explanation evolved from conspiracy theory to truth.

In reality, the causes of social problems and natural disasters are complex and multi-faceted, but "It's complicated" is rarely a satisfying explanation in the polis. Politicians try to avoid blame for problems by shifting the blame to their political opponents. This occurs with any problem, whether it is a devastating natural disaster or a long-standing persistent issue. How would you use these causal theories to explain a longstanding problem, like poverty or health disparities, in the polis? Have you seen politicians use these theories to explain problems in the presidential primary debates?