The Perfect Policy Advisor In An Imperfect World

THE PERFECT POLICY ADVISOR IN AN IMPERFECT WORLD

by Dr. Ohan Balian 2009

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Table of Contents I. Major differences II. A portrait of the perfect advisor III. Policy arguments and best practices VI. Dissemination strategy V. Key strengths and weaknesses

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Guidelines for the enhancement of research use

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Conditions under which research could be useful Research dealing with critical decisions (e.g. forecasting techniques in predicting rates of growth) Strong competitive pressures Techniques providing accurate signaling functions High accountability of the government agency Income distribution issues

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Guidelines for the enhancement of research use

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Recommendations to bridge gap between research and policy making Learn about the history of the issue Target recommendations to groups that are responsible for decision making Present recommendations at the right time i.e. when they are most likely to receive attention. Generally, best to get into the debate early before positions harden Learn everyone's interests and arguments Think like an economist but don’t write like one Keep it simple by using simple examples

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Guidelines for the enhancement of research use

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Recommendations to bridge gap between research and policy making (contd…) Explain which group will be affected by your recommendations instead of talking about “welfare losses or gains” Take implementation and administration into account. Don’t propose solutions that are too optimal but too complex or costly to administer Emphasize a few crucial and striking numbers. Use numbers to decide the number of people affected (say 30% of the population) rather than aggregate monetary values 5

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Guidelines for the enhancement of research use Recommendations to bridge gap between research and policy making (contd…) 

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Try to get access to the same sources of general information as the policy maker such as newspapers, internet sources, etc. since these sources of information influence their decisions Be economical with the use of economics! Apply economic analysis only to problems where it is relevant Discount for political demand – i.e. sometimes the optimum solution is not feasible for political reasons – use second best solutions Dare to be quick and dirty! i.e. some analysis is better than none even if its done at the “back of 6 the envelope”

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Differences in the logic of policy makers and policy analysts Differences in objectives 

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Policy makers focus on distributional factors (i.e. winners and losers) whereas economists focus on efficiency issues Policy makers define goals in quantitative terms (e.g. reducing traffic congestion by 20%). Economists define goals in financial terms (e.g. investing in infrastructure with marginal cost/revenue concepts)

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Differences in logic of policy makers and analysts

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Differences in measuring achievement of objectives Policy makers look at the number of people affected rather than financial costs and benefits Policy makers also assess performance in terms of inputs rather than outputs – e.g. number of new hospital beds rather than improvements in health quality Policy makers weigh losses more heavily than gains. A policy that helps 500 people and hurts 500 people is NOT neutral - It produces 500 enemies! 8

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MAJOR DIFFERENCES BETWEEN POLICY MAKERS AND ADVISORS Differences in logic of policy makers and analysts

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Differences in decision making criteria and means of influence

Policy makers use sunk costs to justify further investments since this reflects the amount of credibility of the policy makers, and the expectations of the project Policy analysts use opportunity costs by looking at alternative uses of funds The issue of compensation is critical for policy makers. They must ensure that losers will be compensated (with mechanisms in place to do so), whereas for economists its more of an afterthought Policy makers favor rules and regulations mainly because (normally) they have backgrounds in law (especially in the US); they try to affect policy through prohibitions and by redefining rights and duties. Economists tend to emphasize economic incentives, specifically by manipulating incentives

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II. A PORTRAIT OF THE PEREFECT ADVISOR 1. Clarity in reasoning and presentation  Economics is becoming increasingly technical with concepts like consumer surplus, deadweight losses, and substitution effects  Economists have to compete with other disciplines and analytical tools  Not enough to be able to speak clearly and rapidly. The policy advisor must also be politically correct  Need to develop a very good sense of psychology and strategy 10

II. A PORTRAIT OF THE PEREFECT ADVISOR 2. Recognition of the policy maker’s need for solutions  Policy makers realize that economics is a 

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complex subject However, they must be presented with a clear description of the stakes and risks that they face They will accept these risks only if they understand the reasoning behind the use of a specific policy In other words, the policy maker must understand that a problem can have different solutions depending on how consumers and investors behave (expectations), multiplier effects, etc…

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II. A PORTRAIT OF THE PEREFECT ADVISOR 3. Honesty  Give advice – not advocate!  Even though an adviser might have his or her own view, he must be faithful to his discipline by providing unbiased evaluations  Must be able to admit ignorance and mistakes  Must be able to recognize controversies  Be a good salesman, not a ‘snake-oil’ salesman  Policy makers (politicians) can easily detect who is honest because very often they are not! 12

II. A PORTRAIT OF THE PEREFECT ADVISOR

4. Recognition of the limits of economics  Recognize

that the policy maker may be anti-economics  Economics deals with efficiency issues whereas public opinion requires equity/fairness issues  I guess this is why this slide is limited!

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II. A PORTRAIT OF THE PEREFECT ADVISOR 5. Competence 

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Be comprehensive and competent although evidence that not much beyond pricilpes101 textbook is needed for policy advice The perfect policy adviser must also know what is not in the textbooks: what are the current controversies which previously popular ideas have been rejected? which ideas are currently in fashion? whom to ask to obtain the latest information? (think-tanks, researchers, advocacy groups) In sum, the closer is the advisor to frontline research, the more he/she is comfortable with the above 14

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 1: Forget about trying to convert your adversary Unless debate is highly intellectual, very difficult to change one’s stand. In the rare occasion when it happens, the change of position has occurred not because of highly powerful arguments on your part, but because your opponent has changed his/her position because of a “shocking revelation”. Only then you can use your arguments to reinforce the defection. 15

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 2: Pay great attention to the agenda of the debate He who defines the issue and sets the priorities is well ahead of the argument. For example, is the global war on terrorism the result of globalization or US aggression in the face of 9/11? Always try to set the agenda of the debate based on what's happening around you using your intuition.

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III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 3: Preach to the converted

To strengthen the commitment of those on your side. This will bind them more securely to the policy and make them more effective spokespersons. Never give the opportunity for your policy/cause to be misrepresented by a weak spokesperson. 17

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 4: Never forget the uncommitted The vast majority (the silent majority) usually form the bulk of those affected by a certain policy. Remember, the ultimate objective is to achieve public support of a specific policy through influencing public support. What works best with opponents such as originality and ridicule does not work with the uncommitted who are likely to be impressed by good sense, decency, and fairness.

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III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 5: Be aware that you are addressing multiple audiences You need to decide whether you want to make a broad appeal or target a specific group. Either decision (or even some balance) may be correct depending on circumstances. Policy makers understand this and this is why their statements are usually vague. Intellectuals (or economists!) on the other hand regard all who are not intellectuals as unimportant and this can make your ‘victory’ very costly. 19

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 6: Be prepared to go around the block many times

When there is a good point to make, keep repeating it. Again, intellectuals are afraid that repetition can make them boring in the eyes of their peers. Success in ideology is a matter of power and will. 20

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 7: Shave with Occam’s razor!

Know what you can afford to sacrifice! For example, if you wish to argue that the US is the most democratic society, there is no need to also deny that it is also the most violent. In other words, don’t waste time and effort on trivial issues. Concentrate on what is essential to your case. 21

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 8: Be careful in your use of examples and historical analogies

Don't distract with too many illustrative examples and historical events. Your audience may concentrate on the factual content of the particular example you’re illustrating and will ignore the original point you were trying to make. Analogies are very useful but use them sparingly.

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III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 9: Avoid trading in motives as an alternative to rebutting the opposing case

Always try to answer the arguments of the opposing view irrespective of whether his motives are good or bad because motives are irrelevant to the soundness of an argument. Discuss motives only at the end (and not in the beginning) when facts have been established and weaknesses exposed. 23

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 10: Emulate the iceberg

Know more than what is required to know about a specific issue. This is important because you will not know exactly what to use on any given occasion. Moreover, the fact that you have good knowledge on an issue will give authority to what you say. 24

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 11: Know your opposition

“He who only knows of his own position knows little of that.” – John Stuart Mill. Understand the opposing view in its strongest because unless you have rebutted it at its strongest, you have not rebutted it at all. 25

III. POLICY ARGUMENTS AND BEST PRACTICES

Rules of thumb on how to win policy arguments and influence debate (12 rules) 

Rule 12: Make sure that the position you are defending is politically and morally defendable

Being on the side of the good and the true does not guarantee success but, ceteris paribus, it certainly helps. 26

III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Understanding the policy makers perspective 

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Understand the policy maker’s objectives and then cast your advice in a way that could achieve these objectives But understanding the policy maker’s perspective is not easy because of poor access to them. Therefore, discuss his perspective with his direct staff Policy issues come haphazardly. The major concern for policy makers is to act first and think later Generally, good economic advice is about convincing others that short-term responses are

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III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Understanding the policy makers perspective  Be aware that the policy making process is a (contd…)

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‘non-linear’ process of decision making where the influence of evidence-based information is heavily dependant on its perceived relevance to political debate and public opinion The policy making process involves policy makers considering independent information from their departments/advisors, and judgments about attitudes and political considerations A known fact of the policy making process is that it’s a non-linear dynamic process where positions change as a result of new information or because of changes in personnel.

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III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Be solution oriented  Provide the advice in a ‘solution-solving manner’. i.e. “Your problem is due to A, B, C. Here are 3 things – X, Y, Z, that you can do.  Provide clear costs and benefits of a solution  Come up with policy implications –i.e. recommendations 29

III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Be practical and pragmatic  

Compromise and be flexible (understand the politics of the situation) Do not be discouraged if your advice is regarded as the 2nd, 3rd or 27th best advice. Still put forward your best solution

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III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Time your advice correctly  

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Do it early, before positions harden Preliminary results of your findings are more likely to have an impact than more concrete results Remember that striving for policy change is a long-term process

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III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Build credibility  From the horse’s mouth!  If policy makers know that you don’t play underhanded games, they will respect your advice  Accuracy is more important than originality

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III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of strategy

Never tell your target audience that they're  wrong! Policy makers don’t like to change their positions on an issue especially if they have publicly expressed it  The danger of not telling they're wrong is that ‘bad’ policies would not receive the criticism they deserve 33

III. POLICY ARGUMENTS AND BEST PRACTICES

Best practices for effectively communicating economics to policy makers (strategy and style) Matters of style  Work on your general communications skill 

Be clear and brief

– Do not use jargon. Be comprehensive to economists and non-economists alike

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Quantify the impacts of various positions

– Have data/evidence to back what you say your proposal will achieve

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Relate your recommendations to the government’s stated objective

– Policy makers tend to base their current decisions on their past decisions. Know what were these past decisions/solutions. 34

IV. DISSEMINATION STRATEGY One-on-one

Meeting policy makers  Adopt proactive strategy  Identify and understand key opinion leaders  Identify and understand key civil servants  Monitor legislative and policy trends  Inform them of your issues  Brief your organization/institute on emerging issues 35

IV. DISSEMINATION STRATEGY One-on-one

Preparation  Prepare an agenda  Circulate highlighted papers in advance  Invite the right people  Prepare meeting room and equipment  Clarify roles of chairperson, secretary and participants 36

IV. DISSEMINATION STRATEGY One-on-one

During meeting  Get

information  Give information  Establish policy information needs  Ask what, when, where, how, and who  Ask ‘why’ very diplomatically  Be punctual 37

IV. DISSEMINATION STRATEGY Policy Memoranda Purpose and Format    

Inform policy makers What do I do next? Simple language Easy to read

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IV. DISSEMINATION STRATEGY Policy Memoranda Content            

Identify key policy problems Discuss why a solution is needed Show consequences of inaction Identify key policy problems Discuss why a solution is needed Show consequences of inaction Explain research objectives Data type and data source Methodology Results Policy options and their consequences End where you started 39

IV. DISSEMINATION STRATEGY Policy Briefs         

Focused Professional, not academic Evidence-based Limited Succinct Understandable Accessible Promotional Practical and feasible

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V. KEY STRENGTHS AND WEAKNESSES OF ECONOMICS IN THE POLICY DOMAIN Weaknesses        

Too isolated from other disciplines Too academic rather than pragmatic Often one-dimensional Liberal foundations are taken for granted Narrow proposed economic reforms Efficiency is at center stage Economics is perceived as self-evident in itself Tendency to under-emphasize non-quantitative information 41

V. KEY STRENGTHS AND WEAKNESSES OF ECONOMICS IN THE POLICY DOMAIN Strengths       

Provision of rigor that other disciplines lack Robust, testable, and comprehensive analytical framework Logical applications of basic intuitive concepts Ability to integrate information from a range of disciplines A sound and consistent theoretical framework Quantifying tradeoffs in a systematic way Very strong in the analysis of uncertainty compared to other disciplines. 42