Once policy options have been articulated, the policy analyst must weigh the various proposals in order to select the most promising alternatives. This chapter reviews the leading evaluative criteria used today as well as the methods of policy analysis most commonly employed. Evaluative criteria are standards used to judge the merits of policy proposals. Commonly used criteria include effectiveness (almost always used), costs, benefits, risks, uncertainty, ethics, political feasibility, administrative feasibility, equity or fairness, liberty or freedom, legality, and (sometimes) constitutionality. Analysts seldom use all criteria for one study. Criteria must be expressed in operational measures: What data will show that the policy is effective? Most often, the criteria are calculated by multiple measures.
A set of different evaluative criteria is employed for each unique policy issue. Effectiveness refers to whether policy outcomes show that the policy was successful at addressing the problem. Efficiency is a highly valued criterion that uses economic concepts to assess the costs of the policy relative to its effectiveness. From an economist’s perspective, the government’s fiscal resources must be used to increase the well-being of members of society, and when the costs of programs are greater than the benefits, the possible alternative uses of the labor, capital, and materials are foregone, depriving society of their value. The equity criterion not only refers to whether the policy process is fair and open but also considers the equity of the resulting policy outcomes. Ethics and political values, although not rational analyses, are often used by analysts concerned about fundamental considerations. The use of diverse evaluative criteria contributes to a better chance of success of any policy.
Numerous economic approaches are used in policy analysis. Cost–benefit analysis is an economic approach that weighs the cost of the policy against its projected benefits (expressed in dollars). Analysts often measure opportunity cost, or the value of opportunities foregone, had the time or money been used otherwise. Economists apply the discount rate to determine the value of future benefits today. They weigh the preferences of the public for various policy options using contingent valuation methods and use sensitivity analysis to assess the dollar impact of applying different discount rates to the same situation. Cost-effectiveness analysis is a similar approach used when benefits cannot be monetized. Risk assessment is a similar analysis that identifies, estimates, and evaluates the possible adverse circumstances of various policy options. Risk evaluation determines the acceptability of risks, while risk management describes how governments can minimize risks.
Analysts utilize decision-making tools to assess policy options. Forecasting makes predictions about future situations based on past and current conditions. Impact assessment is a tool that enables analysts to project the expected environmental and social effects of taking certain actions. Political approaches are a final tool of policy analysts, including political feasibility analysis (whether key policy actors support the change), implementation analysis (assessment of how well policy implementation has gone), and program evaluation (a study of policy outcomes). Ethical analysis, the systematic review of ethical concerns of policy proposals, is less frequently performed by policy analysts and instead is often left to the political advocacy community.