What to look for in writing a policy piece.
Some usual problems according to my experience.
June 21, 2023
Sering dipanggil Imed
Full-time lecturer di Politeknik APP
Part-time lecturer di Universitas Indonesia
Master degree in economics UI/VU
PhD in economics di Australian National University
Associate researcher di Center for Indonesian Policy Studies.
Selengkapnya di imedkrisna.github.io
What to look for in writing a policy piece.
Some usual problems according to my experience.
No economics and/or mathematics background.
Some experience in CIPS’ work.
chance is, I can learn from you. So please don’t be shy.
Economics is NOT about (just) money!
Economics is a study of optimization: how to get the best under constraints.
The same with engineers!
We use very similar tools!
Economists are just a bunch of people who use thermodynamics to explain your daily problems!
Increasingly, economics also do empirics!
Theory: If X leads to Y while Z does not lead to Y, then lets do X.
Does X really lead to Y while Z does not?
The first is the optimization part, the second is the empirical part.
But stil, relationship between Xs & Ys is what interests all economists.
How to best tackle climate change?
Is minimum wage good?
Should we ban trade to industrialize?
How to best feed our people?
Should we invest in school or road?
Some of my blogpost to get a glympse of what economists do:
Naturally, economists often specialize more on issues.
The main reason is resources’ scarcity.
resource = anything you use to get what you want.
mainstream resources are money; Given 4k trilyun APBN, what program should we finance?
But other resources are important too: time, people/institutions, inflation.
The true cost of something is its possible other uses. Money is the least of our concern.
The cost of having holiday, for example, is the money & time you could otherwise use to join a short course.
The cost of doing an S1:
Go straight to work, get experiences & money
Do other degree
I daresay opportunity cost is the core concept of economics!
The principle of opportunity cost leads to a marginal thinking
understand the status quo, then think if it can be (marginally) improved.
e.g., say you have 2 hours to spent on work or play. how to divide?
depends: when’s the work deadline?
if you work for another 30 minutes, would that help with work?
During your daily time, you make decisions on allocating how much time to study and to cook, among other things.
Since you will die if you don’t eat, you can’t allocate 0 hour to cook.
On the other hand, there are those who are very good cook and will cook for you for a little money.
In this case, it may be better if you spend 0 hour to cook, and order food from these chefs.
Trade is the reason why I can study economics: I don’t have to study how to be a doctor. I will just go to the hospital if I need a medical service.
Picture this: your household decided to be independent1, and you print your own currency.
To fulfill your “country” needs, you need to choose: swasembada or trade.
Swasembada: you make everything yourselves with everything you have: food, education, healthcare (internet is counted as import!)
Trade: things you normally do right now: you focus on your trade, “sell” them outside, and “import” the rest!
Extending to firm level:
Why build our own office suit if we can buy microsoft office?
Why build our own server if there’s AWS, Biznet, others?
Easily extending this to country level:
Remember: export is beneficial because we can import from the revenue!
Most policy makers & policy analysts are stumble in the trade argument because they often forgot about resource constraints and opportunity cost.
our land, workforce, APBN, etc are limited.
Even if you have a lot of resources, for example, the extra money could be better spent to grow one thing.
There is almost no policy that’s not biased: benefits some sub-population while hurts others.
Agriculture Imports hurts farmers while helps consumers and industrialists.
Scholarships benefit smart individuals & high-skilled industries.
All subsidies benefit targeted groups at the expense of taxpayers.
Economists often focuses on generalization and leaning toward policies that improves aggregate welfare
When there is an incentive to do something, there will be more and more people exploit it.
As more people do it, the incentive decreases to a point where it is not worth it anymore.
City becomes more crowded (and costly to live in).
Countries’ economic growth reduced after they get rich.
Movement towards equilibrium, however, varies.
Main principles: scarcity, opportunity cost, marginal thinking, & equilibrium.
Economics gets much more complicated that this.
The principle, however, remains the same (more or less)
Consider a country called Kuvukiland which has 2 industries: wheat and bread, and 3 classes of people: consumers, farmers who work in the wheat industry, and bakers who work in the bread industry. Consumers eat only bread & all wheat goes to bakers. Technology is simple: 1 bushel of wheat -> 1 loaf of bread. Price bread = price wheat.
With no trade, farmers produce 8 ton wheat at P=7000. With trade, Kuvukiland can import with international prices at P=6000, demand rises to 10 ton, but at that price, farmers only produce 6 ton. 4 ton are imported.
Discuss: is trade better? Who benefits? If there’s a ballot, who will vote for free trade?
This is not a writing drill. Everybody has their own style.
However, there are some things that you may want to have in your writing.
Don’t forget to keep the principle in our previous learning in your mind while doing this.
Well, in reality, it is not so useful differentiating the two. We often just mix them.
However, you can see the pattern of these works are somewhat similar:
Does policy X really leads to outcome Y?
Is there a better way to get Y? Maybe policy Z is actually better than X?
When we write about policy, aim for these things:
Assess alternative options
Why the regulation is needed? The reason often boils down to the presence of market failure, inefficient prior regulations, or new targets.
Find this in a “menimbang” part, sometimes at “pasal 2”, but sometimes in the media.
Some regulations try to tackle more than one problem, so list them accordingly.
Your paper may or may not contain regulation, but the problem definition is a must-have.
See if these problems can be translated into policy targets.
If you write on a particular policy, first you must tell readers what it is and how does it work.
You must state boldly what it tries to achieve, then you must focus these targets.
Identify whether you can relatively easily inspect those targets.
Identify which target the government say it has been achieved, and check whether it’s true.
If you’re not studying a particular policy, then state these targets in your policy recommendations.
The assessment part usually straightforward. See if you can argue or find data on it.
make sure you understand the mechanism from the policy to the result.
e.g. how CPO exports (the policy) leads to lower domestic prices?
If you know the mechanism, it is easier to find the gap:
Assess qualitatively if finding hard data is not easy.
as long as you focus on the policy \(\rightarrow\) target mechanism, should be fine.
Try to hypothesize policy alternatives, and see if it would have worked better!
Always remember the context around the policy!
No policy IS a policy!
You can try to look for papers or studies on similar policy under different context (usually policies in different countries).
Approach with Cost-Benefit!
Think of cost as not just money.opportunity cost guys!
Benefit also lies beyond money.
Target is often not realistic / too broad. (e.g., Free Trade Agreement -> higher exports)
Correlation is not the same as causation:
reverse causality (X causes Y or Y causes X).
spurious correlation (X & Y moves together \(\neq\) one cause another).
no counterfactual (Try to theorize the counterfactual or better yet use causal inference techniques)
Short-termism / overestimation.
You must also think in a power balance / political context (vested interests):
Which class / part of populations gets the benefit? Which one bear the cost?
Who would help your advocation, who will block it?
Almost all policy is about “keberpihakan”
“Government” is a really broad term. In truth, they’re vastly different between & within Ministries/Agencies: interests, KPI, qualities, party, etc.
The consequence of a target is often unclear for policy makers.
The consequence of a target may be worth it
Maybe its okay to be poor as long as we can call ourselves agriculture nation?
A grand mosque maybe more important than good schools?
We assess, but it’s political decision in the end.
Context matter heavily, especially institutional capacity.
In developed countries, subsidies work well because almost everyone has bank accounts.
Finance is less of a problem in developed countries.
Corruption. I don’t have to say more.
Governments often didn’t know what’s a reform mean.
We often needs to be creative because we face different constraints compared to other countries.
Be aware of your own biases
If all you have is a hammer, everything looks like a nail.
Try your best to keep your mind open, listen to as many vantage points as you can.
“adding things” problem.
Again, always keep power balance & political games in mind.