CONSTRAINTS TO PROBLEM DIAGNOSIS
It is said that at least four times as much time should be spent on problem definition and diagnosis of policy problems as on analysis of alternative courses of action (Lehan 1984, 73). This is not a reference to the tendency of experts in economics and policy analysis to disagree on conceptual and quantitative assumptions and interpretation of data. Proper definition of macroeconomic problems, such as excessive levels of aggregate demand, will still result in dis agreements on the scope and timing of fiscal and monetary policy applications. More precise problem definitions can reduce the scope of later disagreements on how to share the costs and benefits of alternative policy actions. By providing a useful screening methodology, the diagnostic phase can also prevent non-problems from being defined as policy problems. It is as expensive in both staff
time and financial resources to solve the wrong problem (this is known as a Type IIl error) as it is to elevate non-problems to the agenda. Both can be avoided by careful diagnosis, structuring, and definition beforehand.