This document provides an overview of public policy analysis. It defines key terms like policy, analysis, and public policy. Public policy is described as a course of action by governments to address citizen needs and maintain order. Policy analysis involves assessing alternatives to satisfy goals. The document outlines the main actors in policymaking like legislatures and executives. It also describes characteristics of public policy, the stages of the policy process, and the theory of public choice, which applies economic concepts like rational self-interest to political behavior. Public choice theory posits that politicians, voters, bureaucrats, and interest groups act in their own self-interest in the policy process.

1. Business Economics
(MBS First Year) Part B
Economic Policy Analysis
By
Khemraj Subedi
TMC
Lecturer
M.Phil Economics,
M.A. Economics,
M.Ed, Economics
20th January 2016

2. Unit 1:Introduction To Public
Policy Analysis

3. Public Policy; Analysis
(Webster’s dictionary)
Policy:
1. A definite course or method of action selected from among
alternatives and in the light of given conditions to guide and usually
determine present and future decisions.
2. A projected program consisting of desired objectives and the
means to achieve them.
Analysis:
1. Separation or breaking up of a whole into its fundamental elements
or components or component parts.
2. A detailed examination of anything complex made in order to
understand its nature or to determine its nature or to determine its
essential features, through a study.

4. Public policy analysis
Policy Analysis is the process of assessing, and deciding
among alternatives based on their usefulness in
satisfying one or more goals or values.
Policy Analysis is client-oriented advice relevant
to public decisions and informed by social
values.
The job of analysts consists in large part of
producing evidence and arguments to be used
in the course of public debate.

7. Meaning of Public Policy
 Public policy is the means by which a
government maintains order or addresses
the needs of its citizens through actions
defined by its constitution.
 Public policy refers to the policies taken
by the public authority or government into
different sectors like industry, commerce,
health, education, agriculture etc.

8.  The main objective of public policy is to
serve and develop the people by providing
conducive environment, which maintains
the norms and values of the society for
quality life and better human behavior.

9. Definitions
James Anderson "Policy is the purposive
course of action followed by an actor or set
of actors or in dealing with a problem or
matter of concern."
• Forhock,"Public policy is a pattern
attempted either to save or manage political
disputes, or provide rational incentives to
secure agreed upon goals with policy issues
capable of ranging far and wide over both
material goods and ethical issues."

10. To sum up, public policy is a
proposed and purposive course of
action that is directed at achieving
certain goals or at solving the
specified problems faced by persons,
group, society or a nation as a whole.

11. The authorities involved in public
policy formulation
• Legislatures,
• Executives,
• Administrators,
• Councilors,
• Judges
• Paramount Chiefs,
• Elders,
• Monarchs,

12. Characteristics of Public Policy
The public policy includes the following
characteristics:
• Public policy is goal oriented.
• Public policy is a course of action.
• What to do?
• Public policy may have positive or negative
form.
• Public policy is law based and authoritative.
• Public policy is an applied social science.

13. Stages of Public Policy
• Policy demand
• Policy decisions.
• Policy statements.
• Policy Implementation.
• Policy outputs.
• Policy outcomes.

14. Theory of Public Choice
• Public choice theory is a branch of
economics that developed from the
study of taxation and public spending.

15. Public choice is an application of self
interest and utility maximization to explain
political behaviour.
Public choice theory seeks to
understand and predict the behaviour
of politicians and bureaucrats in the
polity by utilizing analytical techniques
developed from economics, based on
the postulate of rational choice.

16. In public choice, the actors assumed
to seek their own self interest as in
the market place are; individuals and
voters, interest groups, bureaucrats,
& politicians/legislatures

17. Historical Background
Public choice theory emerged in the
sixties and received widespread public
attention in 1986, when James
Buchanan, one of its two leading
architects (the other was his colleague
Gordon Tullock), was awarded the
Nobel Prize in economics.

18. • In addition to providing insight into how
public decision making occurs today,
public choice analyzes the rules that
guide the collective decision-making
process itself. These are the
constitutional rules that are made before
political activity gets underway. The
work done by James Buchanan and
Gordon Tullock on
The Calculus of Consent, is one of the
classics of public choice.

19. Public choice takes the same
principles that economists use to
analyze people's actions in the
marketplace and applies them to
people's actions in collective decision
making. Economists who study
behavior in the private marketplace
assume that people are motivated
mainly by self-interest.

20. It postulates that there are maily four
players involved in public policy
They are:
 Politicians,
 General voters,
 Bureaucrats &
 Special interest group

21. Key terms of theory of pubic choice
 Public goods vs. private goods.
Externalities,
Public goods and free riders,
Implication for voluntary action,
 Constitutional choice,
Economic man and bureaucracy,
 Voting rules and bureaucracy,
Market vs. hierarchical organization.

22. Assumptions of Public Choice
Theory
Ostrom & Ostrom (1971) noted that
following four public choice assumptions
about individuals:
 Self-interest,
Rationality,
Benefit maximizing , &
 Uncertainty minimizing.

23. Use of Public Choice in Managerial
Decision Making
Public policy is an important concern
for the administrators, academicians
and the public in large.
The importance of the study of public
policy has assumed a great
significance particularly with the
increase in the scope and size of the
public sectors.

24. use of public policy in managerial
decision making are:
 Scientific reasons.
 Professional reasons.
 Political reasons.
 Utility to general public.
Utility to business decision making.
Utility to statesman.
Utility to administrative official.

25. Institutions,
Processes and
Behaviours
Environmental
Forces and
conditions
Public
Policies
A
B
C
D
E F

26. Linkage A : The effect of environmental forces
and conditions on political and
governmental institutions, processes, and
behaviours.
Linkage B: The effect of political and
governmental institutions, processes and
behaviours on public policy.
Linkage C: The effect of environmental forces
and conditions on public policy.

27. Linkage D : The effect (feedback) of public
policies on environmental forces and
conditions.
Linkage E : The effect (feedback) of
political and governmantal institutions,
processes and behaviours on
environmental forces and conditions.
Linkage F: The effect (feedback) of public
policies on political and governmental
institutions, processes, and behaviours.

28. Environmental Political System Public Policy
Wealth Governmental form Civil rights policies
Urbanization Constitutional type Income redistribution
Economic system Bureaucracy Educational policies
Educational levels Party system Welfare policies
Inequalities Power structure Health Policies
Class structure Pattern of participation Foreign policies.
Cultural patterns Interest group system Defense policies
Racial compositions Level of conflict Tax policies
Religious make-up Characteristics of elites Public spending policies

29. Thanks