The public policy process is the methodological process which policymaking entities undertake to formulate and implement public policy in a variety of sectors. The policy process covers the identification of the problem, policy formulation, the efforts undertaken to influence the policy decision by stakeholders, policy adaptation, the implementation of the policy, and the feedback process which occurs after the policy has been implemented. The policy process is inherently a political process but it is also a complex and multi-layered procedure involving different stakeholders such as governments, interest groups, researchers, and other parties (both individuals and groups) that have different standings and motivations with respect to the debated policy. Due to the interlinkages between stakeholders within the public policy process, policy makers often seek economics advice to ensure that the end result of a policy is beneficial for society.
It is very easy to be critical of a policy. Different groups have different ideas as to how policies could and should be better. Yet, most of this criticism does not take a holistic approach and sees things from the narrow interest perspective of the individual or group concerned. A single faceted approach based on the parties’ interests and agenda is very common when policies are debated, even though some of these try to justify their own perspective in terms of a common or national interest. In the policy making process, policy makers can be faced with arguments presented by different parties with different interests that are factual but in conflict with one another, thereby delaying or stalling the policy decision making process. For this reason, it is important that public policy advisers like ourselves understand the policy advocacy process used by pressure groups to influence the policy making process. Through this understanding, the process may be used from a private sector perspective as a platform for defending one’s commercial interests or from a public sector perspective to ensure that the policy is created based on the needs of the country or a particular population.
Economics has an important role to play in the public policy process, as this is inherently a process that is closely intertwined with public and political economics principles. By way of example, the public policy process seeks to improve social welfare through the recognition and correction of market failures. However, since most policy decision makers tend to be vote-seeking politicians within narrow sectors of the electorate, unbiased economic advice within the process is widely pursued when the targeted sectors of the electorate are wider and when decisions in the full national interest are required . Economics-based public policy advice is very useful both when a policy decision is required to be technical as well as when it needs to be political. Advice can come in the form of public choice and implementing instruments, such as in the case where policy makers seek advice as to which policy option is preferred on the basis of a set of pre-established criteria. Alternatively, economic principles can be very useful in assisting policy makers when the solution to a problem is unclear, such as under crisis situations or very early in the public policy process where a basis upon which a policy is created still needs to be formed. Other economic tools such as Cost-Benefit Analyses, Macroeconomic Analyses & Impact Assessments, and Econometric and Economic Estimations can also be powerful tools in a policy maker’s repertoire throughout the public policy process.
Economics-based public policy advice requires strong policy and economics analysis skills. To generate concrete advice, an analyst must be able to study policies in detail, within their contextual setting and determine their initial need, potential impacts, and development over time, while identifying ‘natural experiments’ that the analyst can use for clues as to what might happen if such natural experiments had to be replicated with at least some of the underlying conditions being different. Results for multiple scenarios under so-called ‘different states of the world’ can be estimated to determine how expenditures and results by sector may vary. Quantitative methods, economic analysis, qualitative assessments, and welfare economics are used to specify problems, formulate models, assess policies, and generate alternatives. Analyses such as impact assessments are usually used to determine a policy’s impact on a relevant population.
When giving advice to public policy makers it is important for the right balance to be struck between the political and the economic elements of an issue. When economic reform is contemplated, or worse still implemented, without considering the political consequences correctly, there may be instances where rather than generating economic efficiency, an action may end up reducing it. Public policy decisions can have considerable effects on every sector of an economy, including its labour market, income distribution and industrial policy. In some cases, the result that yields the highest level of social benefits, if not defined in a sufficiently encompassing way, may tilt the scale in favour of dominant groups. When it comes to politically-sensitive topics, it is important for economics and public policy advisors to factor in the effects of potentially affecting the political dynamics of a situation. It is thus important to determine when a required reform may clash with the political status quo with a view to optimising implementation and minimising instances of unintended policy consequences.
Equinox Advisory Ltd. employs a multidisciplinary team of people with international recognition as experts in various social sciences fields. This team also has a wealth of sectorial knowledge on several issues and sectors honed through several years of practical experience. When combined, this wealth of experience and technical knowledge allows the experts to provide holistic public policy advice to decision-makers and private sector entities with an interest in a particular policy or set of policies.
We have been involved in numerous past projects dealing with public policy advice and the experience gained, together with our multidisciplinary skill set place us in a unique position to be able to advise policy makers and corporations on public policy decisions.