1. Analytic Tools in the Policy Process: What Works and What Does not? ESD 11 December 6, 2000

2. Outline u Available Tools for Policy Analysis –Economic –Political –Business / Finance –Negotiation –Sociometric u Cases and applications –Health –Harbors –Water –Telecom u Discussion of the ESD 11 Final Exam

3. Economic and Financial Tools u Assumption: Homo economicus u Cost/Benefit Analysis u “Social Cost/Benefit” Analysis u Trade-off Analysis u Revenue Analysis –IRR

4. Sociometric u Survey Analysis u Case Study Analysis u.

5. Pareto Attribute 2 Attribute 1 Dominated Alternatives Pareto Superior Alternatives

6. Getting to Yes:The Principles u Separate the people from the Problem –Tomorrow is another day… u Focus on the Interests not the Positions –What is important to the negotiators? –What are the attributes of a good outcome? u Invent Options for mutual gain –Expand the alternative set –“What are we missing?…” u Insist on using objective criteria –How can we measure how we are doing?

7. Political Paradigms u Analyses that ASSUME rational behavior –Again Homo economicus ? –Bounded Rationality ? –Satisficing behavior? –Conflict avoidance behavior? u The Simple Paradigm –Structural Functional Analysis

8. The Cases – What did you use? u Transplant Case? u HarborCo Case? u Water In California Case? u African Telecom? u Other Courses this semester?

9. Two Questions u What policy analytic tools did you use that you “brought with you?” u What policy analytic tools would you have wished to use that you did not, yourself or a team member, have sufficient knowledge to use?

10. Policy Analysis: “Truths” u Question / challenge the assumptions  THE forecast is always wrong u Communication is the key: Make it more understandable not more complicated u Measure the important variables not the variables that are easy to measure

11. Lee, Ball and Tabors on Energy Policy u Technology, not resource depletion, is the driving force for substition u The consequences of poor strategies can be enormous and unpredictable u Most forecasts are wrong, therefore robustness is a critical planning requirement u The task of analysts is to lay out the options, not to tell the decision makers what to do u Measure the right thing u Do not confuse the systems approach with systems analysis u Understand technologies and manage them accordingly u Quality pays and cleaner is cheaper u Don’t overemphasize science and de-emphasize engineering u Government Sponsored R&D projects in areas where the government is not the user of the results are usually ineffective

12. The ESD 11 Final Examination u When: Friday December 15 u From: 9am to 4pm u Where: Your choice (but alone) u How: In and out on Email to BOTH tabors@mit.edu and farzana@mit.edu tabors@mit.edufarzana@mit.edu u Format: –General Problem: A policy analysis based on the policy process paradigm that we have discussed in class (and will discuss again on Friday). –Specific Problem: 5 to 7 stated issues around which your response can be structured.

13. ESD 11 Final: Example u For your home country, or for a nation that you have studied, provide a policy analysis of one of the following issues. Focus your response on a concise statement of the background to the problem and then upon the “cast of characters” and the individual positions and the logic of those positions. Conclude with a discussion of a tactical strategy for implementation of the policy discussed. u Example of a proposed policy –Absorption of CO 2 by forests is a desired means of reducing Global Warming.