Steps in Rationalist Policy Analysis
It is important to spend some time on defining, explaining, and modeling the problem in a useful way, because the problem model determines the rest of the analysis, including which goals and methods should be used to judge the desirability of alternatives and the selection of policy alternatives.
A good way to structure an analysis is to divide the process into two major components: problem analysis and solution analysis. Both are vital.
The Problem Analysis consists of 3 major steps:
Step 1: Understanding the problem, which involves assessing the conditions that concern your client, framing them as market or government failures, and modeling the relationship between the conditions of concern and variables that can be manipulated through public policy.
Assessing the conditions involves determining their empirical basis, in other words, looking for data that will help to put the conditions in a quantitative perspective. A literature review of the symptom should be sufficient. Once a condition has been assessed the framing process should begin. Potentially any positive, or predictive, social science model can be used as the basis for problem analysis. The major focus of explanation here is a specification of the expected deviation between individual self-interest and aggregate social welfare. The framing of problems, in terms of market and government failures, often leads directly to models linking policy variables to the conditions of concern.
Step 2: Choosing and explaining goals and constraints, which involves dealing with the vagueness, multiplicity, and conflict among goals as part of the analytical process. Also, clarifying the distinction between goals and policies. Specifying goals requires one to be normative: you often must decide what should be wanted. Two strategies for determining appropriate goals are: 1) accepting that goals are outputs of analysis as well as inputs to analysis, or, in other words, dealing with the vagueness, multiplicity, and conflict among goals as part of the analytical process; and 2) clarifying the distinction between goals and policies. Goals should be used to evaluate alternative policies, but if a policy is stated as a goal, how can one evaluate it? To avoid this mix up, it is recommended to start by formulating goals as abstractly as possible and policy alternatives as concretely as possible.