195 Midterm Study Guide

Question 1

What is the Policy Process

Answer 1

1) Identify a social goal
2) diagnose the problem
3) identify the appropriate institution for action
4) evaluate the substance and politics of competing policy options
5) implement, enforce, and monitor the policy change

Question 2

Three types of Institutions

Answer 2

1) For profit firms
2) Non-profit firms
3) Governments

Question 3

For-profit firms

Answer 3

• earn a profit for owners
• exist to make money
• Sometimes public sector will contract out to private
• will not voluntarily undertake major activities that lose money in the long run

Question 4

Nonprofit firms

Answer 4

• Undertakes activities where revinues do not necessarily exceed the costs
• Funded by private contributions, gov funding, profitable activities
• Any excess revenues over cost remains in organization (No owners are are entitled to a profit)
• 510c3 excempt of state/fed taxes

Question 5

Governments

Answer 5

• Governed by elected/appointed/passed down royalty, seized by force
• Most societies vest government w/ coercive powers (collect taxes, condemn properties, incarcerate individuals, take children)

Question 6

Scarcity

Answer 6

there is a finite supply of everything worth having

• Whend demand for goods/service exceeds the available supply, price will rise, reducing demand until it matches available supply.
• not everyone gets what they want
• Price is the mechanism we use to ration goods/services
• Public policy includes to rationing goods/services

Question 7

Scientific Uncertainty (Unpredictability)

Answer 7

When new threat is found thats a natural phenomenon, we don’t have a complete understanding of the problem, but must act with urgency
-HIV/AIDs, Global Warming

Question 8

Human Unpredictability

Answer 8

• No humans are exactly the same, or behave the same.

- There is no immutable laws about human behavior

Question 9

Deliberately hidden information (Unpredictability)

Answer 9

-Information individuals/other governments wish to keep secret

Question 10

The sheer complexity of life (Unpredictability)

Answer 10

No two policy problems are exactly the same, nor are two moments in time.
-ex each economic decline is different (depression v 2008 v covid19)

Question 11

Models

Answer 11

simplified illustrations of how systems operate

-Ex: Law of supply and demand : if price goes down demand goes up, if price goes up, supply goes up

Question 12

Rationality

Answer 12

people do what is in their best interest = rational

-self-interested =/= selfish

Question 13

Ceteris Paribus

Answer 13

all other things being equal

• focusing on importance of single factor
• Irl not all other things are equal.

Question 14

Ceteris Paribus

Answer 14

all other things being equal

• focusing on importance of single factor
• Irl not all other things are equal.

Question 15

Role of Incentives (page 80)

Answer 15

1) Help motivate people & explain a range of human behaviors
2) Changing incentives can be a powerful tool for changing behavior (ex: sin tax deturent)
3) rational individuals and firms will seek to avoid any outcome that makes them worse off
4) Policies that fail to anticipate how rational individuals/firms will respond will have serious unintended consequences.
- Individuals who feel policy will make them worse off will use significant resources to evade

Question 16

Law of unintended consequences

Answer 16

When one policymaker seeks to fix one problem, and inadvertently

Question 17

Moral Hazards

Answer 17

when individuals or firms that are protected against some kind of loss act with less caution than they would have otherwise, thereby making a bad outcome more likey.
-Those insured will take less precautions

Question 18

Principal-Agent Problems

Answer 18

When one party, the principal, expects another party with different motivations, the agent, to act in a way that is consistent with the principal’s goals and objectives but does not have sufficient expertise or resources to monitor the agent’s behavior.

1) Principal hires an agent for task, and agent has incentive to behave in ways inconsistent w/ principle’s
2) principal can’t easily monitor agent’s behavior

Question 19

Adverse selection

Answer 19

When individuals use private information to sort themselves into/out of market transactions
-Can distort market/cause its collapse
(individuals having more health info about themselves than insurance providers)
(School loans payed by salary % failing at yale)

Question 20

Asymmetry of Information

Answer 20

when one party to a transaction has more information than the other

1) understanding how individuals and firms act in the face of incomplete information is an important part of understanding human behavior
2) Policy makers are often called upon to ameliorate information problems

Question 21

SB 277 Facts (Add more 277 cards)

Answer 21

bill addressing declining vaccination rates

• Fighting antivax movement , measles outbreak, and over 25% of schools under herd immunity levels
• Had personal belief exemption

Question 22

SB 277 Policy

Answer 22

• Eliminated personal beliefs and religious exemptions for school immunization reqs
• Student’s can’t be admitted for the first time if not vaxed
• Can’t move into 7th grade w/o vax
• doesn’t apply to homeschool
• kept medical exemptions

Question 23

SB 277 Consequences and why they happened

Answer 23

• Vax goes up but then declines
• increase in medical exemptions
• increase in homeschoolers w/o shots