Due: End of Week 4 Value: 12% of final course grade Length: 1,000 to 3,000 words Submission: File upload through Canvas, DOCX or PDF
Purpose
This essay asks you to move beyond the stated purpose of a policy and examine what actually happens after the policy is adopted. Public programs often claim to help one group, correct one problem, or produce one social benefit. But the actual effects of a policy may be more complicated.
A policy may help some people while hurting others. It may shift benefits to groups other than the intended beneficiaries. It may create incentives that change private behavior. It may improve equity while reducing efficiency, or it may reduce one inequality while creating another. It may also create government failure through bureaucracy, poor information, weak incentives, political pressure, or implementation problems.
For this essay, your task is to choose one public policy and evaluate its equity, incidence, and risk of government failure.
Prompt
Choose one public policy and write a thesis-driven essay evaluating who is supposed to benefit, who actually benefits, who pays, and what can go wrong in implementation.
Your essay should answer the following central question:
Does this policy distribute benefits and burdens in a defensible way, and what risks of government failure or unintended consequences does it create?
You may choose a topic such as rent control, housing vouchers, public college subsidies, student loan forgiveness, Medicaid, Medicare, farm subsidies, disaster aid, public transit subsidies, private prisons, unemployment insurance, Social Security, environmental regulation, public school funding, energy subsidies, or another relevant public policy.
Required Elements
Your essay must do all of the following:
- Identify the policy clearly.
Choose a specific policy or program. Avoid writing about a broad area such as “housing,” “education,” or “health care” unless you narrow it. For example, “rent control,” “housing vouchers,” “public college tuition subsidies,” or “Medicaid expansion” would work better.
- Explain the policy’s stated purpose.
What is the policy supposed to do? Who is it supposed to help? What problem is it supposed to solve?
This section should be brief. The essay should not become a general history of the policy.
- Analyze incidence.
Incidence asks who ultimately benefits from or bears the burden of a policy. The intended beneficiary is not always the actual beneficiary.
Your essay should explain:
- Who is supposed to benefit?
- Who actually benefits?
- Who pays?
- Are any benefits shifted to another group?
- Are any benefits capitalized into asset prices, wages, rents, tuition, land values, or other market outcomes?
- Are the short-run effects different from the long-run effects?
For example, a housing subsidy may be intended to help renters, but if the housing supply is limited, some of the benefit may shift to landlords through higher rents. A transit project may benefit riders, but it may also raise property values near new stations.
- Evaluate equity.
Explain whether the policy is progressive, regressive, or mixed. Does it primarily benefit lower-income groups, higher-income groups, middle-income groups, firms, property owners, workers, consumers, or some other group?
You should also address whether the distributional outcome is defensible. A policy can have good intentions and still distribute benefits poorly. A policy can also look inefficient in some ways while still having a strong equity argument.
- Evaluate the efficiency-equity tradeoff.
Explain how the policy affects efficiency and equity together. Does it improve equity at the cost of efficiency? Does it improve efficiency but worsen inequality? Does it potentially improve both? Does it create deadweight loss, distorted incentives, or inefficient overuse or underuse of a good or service?
Do not simply say “there is a tradeoff.” Explain what the tradeoff is.
- Identify private-sector responses or unintended consequences.
Explain how individuals, firms, landlords, schools, hospitals, agencies, or other actors might respond to the policy. A policy’s final effect depends partly on how people adjust their behavior.
Possible responses include:
- Reduced private savings
- Higher prices
- Lower supply
- Overconsumption
- Underinvestment
- Crowding out private support
- Strategic eligibility behavior
- Lower quality
- Cost shifting
- Rent seeking
- Identify one risk of government failure.
Explain one way the policy could fail because of the structure or incentives of government itself.
Possible government failures include:
- Limited information
- Limited control over private-sector responses
- Limited control over bureaucracy
- Weak incentives for efficiency
- Principal-agent problems
- Political capture
- Special interest pressure
- Poor implementation
- Excessive risk aversion
- Rules that protect fairness but reduce flexibility
- Make an argument.
Your essay should have a clear thesis. It should make a claim about whether the policy’s distribution of benefits and burdens is defensible, and whether the policy’s risks are acceptable given its goals.
Do not simply list winners, losers, and possible problems. Use those details to make a judgment.
Questions to Consider
You do not need to answer every question below, but they may help you develop the essay:
- Who does the policy claim to help?
- Who receives the benefit first?
- Who ultimately keeps the benefit?
- Who pays directly?
- Who pays indirectly?
- Are benefits shifted through prices, rents, wages, land values, tuition, or taxes?
- Are the policy’s effects different in the short run and long run?
- Is the policy progressive or regressive?
- Does the policy create an efficiency loss?
- Does the policy reduce inequality?
- Does the policy create incentives to change behavior?
- Could private behavior offset the policy’s intended effect?
- What information does government need to implement the policy well?
- What bureaucratic or political incentive could distort the policy?
- What would make the policy work better?
Structure
Your essay should include:
- A title
- An introduction with a clear thesis
- A short explanation of the policy and its stated purpose
- An analysis of intended and actual beneficiaries
- A discussion of incidence
- An evaluation of equity and efficiency
- A discussion of private-sector responses or unintended consequences
- An explanation of at least one risk of government failure
- A conclusion that explains what your analysis shows
A strong essay will not simply say that a policy helps people or wastes money. A strong essay will explain who benefits, who pays, what incentives are created, and whether the policy’s tradeoffs are justified.
Course Concepts You May Use
Useful concepts from Week 4 include:
- Equity
- Efficiency-equity tradeoff
- Social welfare functions
- Utilitarianism
- Rawlsianism
- Consumer surplus
- Deadweight loss
- Poverty
- Inequality
- Lorenz curve
- Gini coefficient
- Incidence
- Intended beneficiaries
- Actual beneficiaries
- Capitalization of benefits
- Short-run incidence
- Long-run incidence
- Progressive distribution
- Regressive distribution
- Income effects
- Substitution effects
- Crowd-out
- Crowd-in
- Government failure
- Bureaucracy
- Principal-agent problem
- Limited information
- Political constraints
- Rent seeking
You do not need to use all of these terms. It is better to use a smaller number of concepts carefully than to list many concepts without explaining them.
Evidence and Sources
You should use course material from Week 4. Outside research is allowed, but it is not required. If you use outside sources, cite them clearly.
The main purpose of this assignment is not to collect as many facts as possible. The main purpose is to show that you can evaluate who actually gains and loses from a policy, and what problems may appear after implementation.
Grading Criteria
This essay will be graded on the following criteria:
Policy identification
The essay identifies a specific public policy and explains its stated purpose.
Incidence analysis
The essay explains who is supposed to benefit, who actually benefits, who pays, and whether benefits or burdens shift to other groups.
Equity analysis
The essay evaluates whether the policy is progressive, regressive, or mixed, and whether its distributional consequences are defensible.
Efficiency and tradeoffs
The essay explains the efficiency-equity tradeoff and identifies any relevant incentive problems or efficiency losses.
Private-sector response
The essay explains how individuals, firms, or other actors may change behavior in response to the policy.
Government failure
The essay identifies and explains at least one risk of government failure or implementation failure.
Argument
The essay has a clear thesis and makes a judgment based on the analysis.
Writing quality
The essay is clear, readable, and edited. The writing should be direct and analytical.