PROBLEM-CENTERED POLICY ANALYSIS

(Dunn, 1994)
Orange : Phases of Policy Making
Yellow : Steps in Analysis
Blue: Analytical Information
POLICY
PERFORMANCE
POLICYASSESSMENT POLICYFORMULATION

Evaluation Problem Structuring Forecasting

Structuring
POLICY
Structuring

Problem
PROBLEM
Problem

POLICYOUTCOMES POLICYFUTURES

Problem Structuring
POLICYIMPLEMENTATION POLICYADOPTION
AGENDA SETTING

Monitoring Recommendation

POLICYACTIONS
 FIVE PHASES IN PUBLIC POLICY-MAKING

1. AGENDA SETTING – deciding what issues will be decided,

what problems will be addressed by government

2. POLICY FORMULATION – developing policy proposals to

resolve issues and ameliorate problems

3. POLICY ADOPTION – selecting a proposal, developing

political support for it, enacting into law

4. POLICY IMPLEMENTATION – planning, organizing, staffing,

directing, coordinating, reporting, budgeting

5. POLICY ASSESSMENT – reporting outputs, evaluating

impacts, and proposing changes or reforms
 FIVE STEPS IN POLICY ANALYSIS

1. PROBLEM STRUCTURING– a method used to produce

information about the nature of the problem and its potential
solution

2. FORECASTING – a method used to produce information

about the probability of occurrence of policy futures

3. RECOMMENDATION – a procedure used to produce

information about the probable consequences of future
courses of action and their value or worth

4. MONITORING– a procedure used to produce information about

the past causes and consequences of policies

5. EVALUATION – a procedure used to produce information

about the value or worth of past and/or future courses of
action
 FIVE POLICY-ANALYTIC INFORMATION

1. POLICY PROBLEM – an unrealized need, value, or opportunity

which, however identified, may be attained through public
action

2. POLICY FUTURES – the forecasted consequence of a policy

action

3. POLICY ACTION – a complex series of moves guided by a

policy alternative that is designed to achieve certain
values

4. POLICY OUTCOME – an observed consequence of a policy

action

5. POLICY PERFORMANCE – the degree to which a give policy

outcome contributes to the attainment of values
 P.A.S.: POLICY ANALYSIS MADE SIMPLE
• P – PROBLEMS
Examples:
(1) Situational Problem: increasing number of dengue cases due to the Dengvaxia scare
(2) Policy Problem: dengue vaccination is not mandatory among children

• A – ALTERNATIVE POLICIES
Examples:

Alternative 1: DepEd to issue administrative order to make dengue vaccination as part

of the requirements for admission of children into Grade 1

Alternative 2: DSWD to issue administrative order making dengue vaccination as part

of the requirements for beneficiary-families to fulfill to continue receiving their
benefits in 4Ps

Alternative 3: Congress to pass a law ordering the DOH to vaccinate all children
regardless of health and economic status

•S – SOLUTION (from among the alternatives)

Example:
Alternative 3: Congress to pass a law ordering the DOH to vaccinate all children regardless of
health and economic status
POLICY PROBLEM
IDENTIFICATION
Policy Analysis and the Policy Making Process:
Where do we consider the policy problems
Problem Structuring Phases

Problem
Search

Problem Problem
Sensing Definition

Problem
Specification
Problem Structuring involves
…
An awareness that there is a problematic
situation (problem sensing)
A recognition that a problematic situation does
exist (problem search)
 For example, fishing as an industry is no longer
economically viable
 An admission that It has different intepretations
of causes (problem search and problem
definition)
 Outdated fishing technology
 Low incentives for fishing because of inadequate
facilities for refrigeration, processing
Problem Structuring involves
...
 Recognition that It involves different
stakeholders (problem search)
 Those that are affected by or affecting the problem
 Fishermen, fish vendors, government, households,
fish processors, distributors, investors, equipment
producers
 A definition or description of the problematic
situation (problem definition)
 A method of describing its causes and
effects (problem definition and
specification)
Problem definition focuses on policy
problems
 A policy problem is . . .
 A condition or situation considered by people or
stakeholders (even by the government) as unsatisfactory.
■ How the condition or situation is considered as unsatisfactory
may differ from one stakeholder or actor to another; possible
solutions also may differ
 an unrealized need, value, or opportunity which may be
achieved through public action
 The condition is unsatisfactory or undesirable because
it
 Deviates from standards or expectations
 Prevents us from realizing a development potential or from
taking advantage of an opportunity
 To address both, public action (by the
government) is needed and demanded.
Characteristics of Policy Problems

 Interdependence
 Policy problems in one area affect policy problems in other
areas
 Subjectivity
 Selective or differing definitions of conditions give rise to a
policy problem
 Socially constructed
 Policy problems are products of human judgment or of
human decision to act on what is considered to be a
problematic situation.
 Dynamic
 There are many different solutions for a given policy
problem as there are definitions of that problem
 Example: Fisheries sector from a value-
chain perspective

Input
Production Trading Processing Marketing Consumption
Provision

Transportation of
Availability Transportation Conversion

of harvested processed
Access
products goods

Provision Harvesting Quality control Quality

of harvests control
Distribution
Labeling
and
packaging
Examples of Possible Policy
Problems or Unsatisfactory
Conditions
Input Provision Production Trading Processing Marketing

Lack of access Lack of access Lack of access/ Lack of access Weak

to inputs and to technology linkage to to technology organizational
resources relevant clients/ for processing capabilities on
buyers marketing

Unequal Low acceptance Lack of Low level of Low knowledge

distribution of of new effective adaptation and on packaging
inputs technology organization of application of
producers technology

Poor quality of Difficulties on Slow acquisition Low level of Poor linkage/

inputs getting new of skills and capacity access to
knowledge on tools for capacity on profitable
effective effective value adding markets
technology trading processing

High cost of Lack of transfer

inputs of knowledge
to users
 Problem Tree Analysis

 Identifies a CORE PROBLEM and its effects/ends

and root causes/means
 The ROOTS of the tree represents the CAUSES
of the problem
 The TREE BRANCHES represent the EFFECTS of the
problem
 Used to LINK the various issues or factors which
may contribute to a problem
 Helps to IDENTIFY the underlying or root causes
of a problem
 It helps us VISUALIZE THE RELATIONSHIP
between cause and effect
IDENTIFYING THE ROOT CAUSE/S

1. The one which occurs most often

2. The cause related to all other causes; the one
that explains other causes
3. The one which the experts/literature/studies
point to
4. Therefore, if tackled, will contribute to
solving other causes, the focal
problem, and the effects
Assessment of
Alternatives
 WHERE ARE WE NOW?

POLICY
PERFORMANCE
POLICYASSESSMENT POLICYFORMULATION

Evaluation Problem Structuring Forecasting

Structuring
POLICY
Structuring

Problem
PROBLEM
Problem

POLICYOUTCOMES POLICYFUTURES

Problem Structuring
POLICYIMPLEMENTATION POLICYADOPTION
AGENDA SETTING

Monitoring Recommendation

POLICYACTIONS
CRITERIA FOR THE ASSESSMENT OF
POLICY ALTERNATIVES

• EFFECTIVENESS – achievement of the valued outcome

• EFFICIENCY – the amount of effort required to produce a given
level of effectiveness
ADEQUACY – the extent to which any given level of effectiveness
satisfies the needs, values, or opportunities that gave rise to a
problem
• EQUITABLE – where effects or efforts are fairly or justly
distributed
• RESPONSIVENESS – the extent that a policy satisfies the needs,
preferences, or values of particular groups
• APPROPRIATENESS – the extent that a policy is suitable or fitting
to the needs, preferences, or values of particular groups
 SELECTED CRITERIA FOR SELECTION OF POLICY
ALTERNATIVES
• Effectiveness - whether the alternatives will actually
produce the desired result or meet the objective, i.e.,
will outcomes achieve their purpose?

• Cost-Efficiency – whether the benefits will outweigh

the costs of each alternative

• Acceptability to stakeholders – whether the

alternatives will gain more supporters than
oppositors
Source: Florano, 2004-2018
SELECTED QUANTITATIVE AND QUALITATIVE METHODS
FOR SELECTION OF POLICY ALTERNATIVES

CRITERION QUALITATIVE QUANTITATIVE

METHOD METHOD
Effectiveness Policy Delphi Effectiveness-Cost
Ratio

Cost-Benefit Intangible Cost- Intangible Cost-

Benefit Analysis Benefit Analysis

Acceptability Stakeholder Analysis PRINCE Political

Accounting System

Source: Florano, 2004-2018

 ASSESSMENT OF THE POLICY ALTERNATIVES

ACCEPTABILITY TO POLICY
INTANGIBLE COST-BENEFIT
EFFECTIVENESS STAKEHOLDERS
ALTERNATIVE ANALYSIS
(Policy Delphi) (Stakeholder Analysis)

BENEFITS COSTS SUPPORTERS OPPOSITORS

Ben1 Cost1 Sup1 Opp1

Alt. 1: Status quo Cosy2 Opp2
***
Cost3 Opp3

Alt. 2: Abolish X Ben1 Cost1 Sup1 Opp1

by repealing RA Ben2 Cosy2 Sup2 Opp2
*****
123 Ben3 Cost3 Sup3 Opp3
Ben4 Sup4

Alt. 3: Modify X by Ben1 Cost1 Sup1 Opp1

amending RA 123 Ben2 Sup2
****
Ben3 Sup3
Ben4 Sup4

Source: Florano, 2004-2018

 ASSESSMENTS
OF THE POLICY ALTERNATIVES: QUANTITATIVE

ACCEPTABILITY TO
EFFECTIVENESS TANGIBLE
POLICY
ALTERNATIVE (Effectiveness- COST-
STAKEHOLDERS
Cost Ratio) BENEFIT
(PRINCE Political
ANALYSIS
Accounting
(Benefit-Cost Ratio)
System)
Alt. 1: Status quo
ECR = 0.5 BCR = 1.5
POS =95%

Alt. 2: Abolish X
by repealing RA
123 ECR = 3.0 BCR = 2.0 POS = 95%

Alt. 3: Modify X
by amending
RA 123 ECR = 1.50 BCR = 3.0 POS = 90%
Source: Florano, 2004-2018
TYPES OF SPILLOVERS AND EXTERNALITIES

1. Production-to-production spillover or
externality: The products of a program
serving one target group or jurisdiction may
affect (positively or negatively) the products
of another.

2. Production-to-consumption spillover or
externality: The products of a particular
program may affect the quality and quantity of
goods consumed by members within another
target group or jurisdiction.
 TYPES OF SPILLOVERS AND EXTERNALITIES

3. Consumption-to-consumption spillover
or externality: The consumption of
activities of public programs in one area
may affect consumption pattern within
adjacent target groups or jurisdictions.

4. Consumption-to-production spillover or
externality: The consumption activities of
public programs in one area may affect the
production activities of public and private
programs in adjacent areas.
 TYPES OF CONSTRAINTS

1. Physical constraints – state of development of knowledge or

technology

2. Legal constraints – public law, property rights, and agency

regulations

3. Organizational constraints – organizational structure and

processes

4. Political constraints – political opposition

5. Distributional constraints – inability to provide equitable

distribution of benefits

6. Budgetary constraints - funds

 ASSESSMENTS
OF THE POLICY ALTERNATIVES
MITIGATING
MEASURES
ALTERNATIVE SPILLOVERS EXTERNALITIES CONSTRAINTS (vs. externalities &
constraints)
Alt. 1: Replace
jeepneys with
mass
transportation
vehicles
Alt. 2: Relocate
50% of the
residents,
commercial
establishments,
and factories in
provinces
surrounding
Metro Manila
Alt. 3: Transfer the
central
government
outside Metro Source: Florano, 2004-2018
Manila
QUALITATIVE METHOD:
POLICY DELPHI
 BRIEF HISTORY

• Delphi refers to the hallowed site of the most revered oracle in

ancient Greece (“Oracle of Delphi”)

• Developed between 1950-1960 at RAND Corporation by Olaf

Helmer, Norman Dalker (Dalkey), and Nicholas Rescher

• Originally used by RAND Corporation for the following six topics: (1)
scientific breakthroughs, (2) population control, (3) automation, (4)
space progress, (5) war prevention, and (6) weapon systems .

• Now, widely used in public policy making and business forecasting.

Source: Patton and Sawicki, 1988

 NATURE AND OBJECTIVE

• Nature - structured process for collecting and distilling

knowledge from a group of experts by means of a series
of questionnaires interspersed with controlled opinion
feedback.

– recognizes human judgment as legitimate and useful

inputs in generating forecasts

• Objective - the reliable and creative exploration of ideas

or the production of suitable information for decision
making.
Source: Patton and Sawicki, 1988
 CHARACTERISTICS

1. Structuring of information flow – getting

opinions from geographically-dispersed
experts

2. Regular feedback after each round

3. Anonymity of experts to maintain

independence of opinions
Source: Patton and Sawicki, 1988
 STEPS-1

1. Formation of a team to undertake and monitor a Delphi on a

given subject.

2. Selection of one or more panels to participate in the exercise.

Customarily, the panelists are experts in the area to be
investigated.

3. Development of the first round Delphi questionnaire

4. Testing the questionnaire for proper wording (e.g.,

ambiguities, vagueness)

5. Transmission of the first questionnaires to the panelists

Source: Patton and Sawicki, 1988

 STEPS-2

6. Analysis of the first round responses

7. Preparation of the second round questionnaires (and possible

testing)

8. Transmission of the second round questionnaires to the panelists

9. Analysis of the second round responses (Steps 7 to 9 are

reiterated as long as desired or necessary to achieve stability
in the results.)

10. Preparation of a report by the analysis team to present the

conclusions of the exercise

Source: Patton and Sawicki, 1988

 STRENGTHS

• Avoids the problems of group dynamics:

1. “Follow the leader” mentality

2. Reluctance to abandon previously stated opinions

• Anonymity
• Controlled feedback
• Statistical response

Source: Patton and Sawicki, 1988

 WEAKNESSES

• Simplification urge
• Illusory expertise
• Sloppy execution
• Format bias
• Manipulation of
Delphi

Source: Patton and Sawicki, 1988

 EXERCISE 1: POLICY DELPHI

Instructions (4 Participants):

1. Using the Policy Delphi matrix, the leader will conduct the
DELPHI by sending the slide to the each participant by email.

2. The leader will tabulate them and inform the participants about the
results without mentioning who-said-what. Then, they will ask again
the same question and write their reasons. The interviewees are
allowed to change their answers.

3. The leader will do 3 rounds. After the 3rd round, he/she will report the
results of the exercise.
 EXERCISE 2: POLICY DELPHI

To solve the enormous traffic jam in Metro Manila, which do you think is the best
solution. Rank the alternatives from 1 to 3, with 1 as the best. State your reason
for your top 1 answer.

ROUND NO.:

Alternative Rank Reason for the selection of

the top 1 alternative
Alt. 1: Replace jeepneys with
mass transportation vehicles
Alt. 2: Relocate 50% of the
residents, commercial
establishments, and factories
in provinces surrounding
Metro Manila
Alt. 3: Transfer the central
government outside Metro
Manila

Source: Florano, 2004-2018

QUALITATIVE METHOD: INTANGIBLE
COST-BENEFIT ANALYSIS
 COST-BENEFIT ANALYSIS (CBA)

• CBA is an approach that allows an analyst

to maximize the combined or aggregate
welfare of the members of a community.

• The money or monetary values for all costs

and benefits is the object of analysis.

Source: Iglesias, 2001

 TYPES OF COSTS AND BENEFITS
• Primary Cost or Benefit– that will directly result
from the implementation of one policy alternative or
another ; directly related to a policy’s objective

• Secondary Cost or Benefit – stems indirectly from

policy objectives

• Tangible Cost or Benefit – can be measured in

terms of available market prices

• Intangible Cost or Benefit – does not have a

market price
Source: Iglesias, 2001
 INTANGIBLE OR NON-MONETARY
COSTS AND BENEFITS
• Non-monetary costs - spent in the
form of time, convenience, effort and
psychology

• Non-monetary benefits - are positively

valued outcome the which do not involve
direct money
SOCIAL COST BENEFIT ANALYIS

• Whose cost?

• Whose benefit?

Keep in mind who will be the recipient – the

society or the targetted public/sector.
 STEPS

1. Identify the stakeholders/beneficiaries.

2. Enumerate all potential intangible costs
and benefits to them.
3. Make a decision, i.e., if there are more
costs than benefits, recommend the
policy alternative.

Source: Florano, 2004-2018

 EXAMPLES

COSTS BENEFITS

• Confusion • Enhanced skills

• Breakdown in peace • Attain peace of mind
and order • Increase in
• Loss of confidence confidence
• Environmental • Increase in
degradation awareness
• Enjoy scenic
panorama
Source: Florano, 2004-
2018
EXERCISE : INTANGIBLE COST-
BENEFIT ANALYSIS
• What do you think are the intangible costs and benefits of the
Pantawid Pamilyang Pilipino Program to its beneficiaries and to
the government? Use the matrix below to list them down:

BENEFICIARIES GOVERNMENT
Benefits Costs Benefits Costs

Source: Florano, 2004-2018

QUALITATIVE METHOD:
STAKEHOLDER
ANALYSIS
 STAKEHOLDER ANALYSIS

• Stakeholders’ analysis is both qualitative and a

quantitative tool used to clarify the roles of different players
in policymaking.

• “An organized approach to understanding system, by

means of identifying stakeholders and assessing their
relationships and their respective interests in, or influence
on that system.”

Source: Mendoza, 1998

WHO IS A STAKEHOLDER?

Stakeholders in a process are actors

(persons or organizations) with a vested
interest in the policy being promoted.
 WHICH STAKEHOLDER
CHARACTERISTICS ARE ANALYZED?

1. Knowledge of the policy

2. Interest related to the policy
3. Position for or against the policy
4. Potential alliances with other
stakeholders
5. Ability to affect policy process (through
power and/or leadership)

Source: Mendoza, 1998

 STEPS

1. Identify the stakeholders

2. Investigate the stakeholders : Motivation, Value, Beliefs,

Resources

3. Choose the site of decision-making or political arena

4. Assess stakeholders’ power, interest and potentials

5. Make a political judgment – What is the political

feasibility and social acceptability of the alternatives
among the identified stakeholders?

Source: Mendoza, 1998

 TERMINOLOGIES

• Motivation - the reason or reasons one has for

acting or behaving in a particular way.

• Value - a person's principles or standards of

behavior; one's judgment of what is important in
life

• Belief - trust, faith, or confidence in

someone or something

• Resources/Sources of Power – in the form of

money, allies and friends, logistics, etc.
Source: Merriam-Webster Online Dictionary, 2018
 EXAMPLE - Alternative 1: Stock distribution option under CARP

Stakeholder Position/ Motivations/ Sources of Power

Stand Values/Beliefs

Farmers no Ownership of land None

Increased agricultural
productivity Economic
activity Emotional
attachment with the
land

Political Leaders yes Efficient land use They have the

Increase taxation authority to reclassify
Increase income lands

DAR no Strict and fair Authority and approval

implementation of to convert
CARP
Provision of support
services
 STAKEHOLDER MAPPING

• The visual representation of a stakeholder

analysis, organizing stakeholders
according to key criteria.

• Some of those criteria may include

interest, influence, financial stake,
emotional stake, those on the periphery
who are still important enough to keep in
the loop, etc.
Stakeholder Mapping
Stakeholder Mapping
EXERCISE : STAKEHOLDER ANALYSIS
• On the Boracay “pollution” problem, identify the stakeholders,
their stand, motivation, beliefs, values, and source of power.
Use the matrix below:

Stakeholder Position/ Motivations/ Sources of Power

Stand Values/Beliefs

Source: Florano, 2004-2018

QUANTITATIVE METHOD:
COST-BENEFIT
ANALYSIS
 “C O S T”
“Is a resource that is or will be
utilized to implement a policy”
(cost is not necessarily undesirable, e.g., salaries)

• Sunk costs – once money is spent on it and could no

longer be recovered, it is considered “sunk.” (vs.
prospective cost)

• Operating costs – are expenses due to implementing a

policy or operating a program

• Opportunity costs – are potential earnings or

benefits that will have to be given up to implement a
policy or program. Source: Iglesias, 2001
 “B E N E F I T S”

“Is a positively valued policy outcome”

• Can be the money earned by a project

• Could also be a “negative cost” or

savings on potential expenses

• Benefit is value-laden, i.e., what some may

value positively may not be valued the same
way by others.
Source: Iglesias, 2001
 PROCEDURES OF CBA

1. Identify all tangible costs and benefits. If there difficulties in

putting monetary values to them, do shadow pricing.

2. Compute the discounted costs and benefits every year

using a discount factor.

3. Separately, add all discounted costs (=total discounted cost

or tdC), and discounted benefits (=total discounted benefit or
tdB)

4. Divide tdB by tdC.

5. Make the recommendation.

Source: Florano, 2004-2018
 METHODS OF SHADOW PRICING
 Comparable pricing – analogy of same type of service
or good

 Survey analysis – ask the respondents for their

willingness to pay and the corresponding amount

 Derive the demand – indirect cost paid to enjoy the

benefit

 Cost of compensation – cost of compensating for

unwanted externalities
 BENEFIT-COST RATIO (B-C RATIO)

• B-C Ratio – is a measure of economic efficiency; the ratio

of totalled discounted benefits to totalled discounted
costs.
Total Discounted Benefits (tdB)
• Formula: B-C Ratio =
Total Discounted Costs (tdC)

Source: Iglesias, 2001

 DECISION RULE FOR CBA

• B-C RATIO SHOULD BE = OR > 1

• WHEN COMPARING MORE THAN ONE

ALTERNATIVE, CHOOSE THE
ALTERNATIVE WITH THE HIGHEST
RATIO

Source: Iglesias, 2001

 DISCOUNTING
• Future Value (FV) – refers to one or more items of costs or benefits
that will take place in the future; the object of analysis in discounting

• Discount rate ( r ) – is the rate chosen by the analyst to translate

future costs and benefits to their equivalent values in the present

• Discount factor (df) – indicates the combined effect of the discount

rate and the time period (e.g., number of years) in which the
discounting must occur; is a multiplication factor that is used to
convert future values into its equivalent value in the present time

• Present Value (PV) – is the result of conversion through

discounting; the equivalent of an FV in terms of the value of money
in the present
Source: Iglesias, 2001
 SOCIAL DISCOUNT RATE

• SDR is the appropriate value of r to use in computing

present discount value for social investments.

• The proper discount rate should represent the

opportunity cost of what else the firm could accomplish
with those same funds.

• If that means that the money could be instead used to

invest in the private sector that would yield 5% and that
is the next best alternative for using that money then
5% would be the social discount rate.
 DISCOUNT FACTOR (df)

1
• Formula: df = ------------
(1 + r) n

where: df = discount factor

r = discount rate (expressed in decimal
number, ex. 15% = 0.15)
n = number of years over which a
future is being discounted

Source: Iglesias, 2001

 TO ILLUSTRATE THE INCREASING EFFECT OF AN
INCREASING n
on a df with an r of 15%

REMEMBER!

• At n = 0: df = 1/ 1.150 = 1/ 1 = 1

• At n = 1: df = 1/ 1.151 = 1/ 1.15 = 0.8696

• At n = 2: df = 1/ 1.152 = 1/ 1.3225 = 0.7561

• At n = 3: df = 1/ 1.153 = 1/1.520875 =0.6575

 PRESENT VALUE (PV)

PV = FV * df

Where: PV = present value

FV = future value being
discounted df = discount factor

What’s the PV of P100,000 in the fourth

year using r of 15%?
 EXAMPLE: B-C Ratio
Alternative 1
YEAR BENEFITS COSTS df Discounted Discounted
(10%) Benefits Cost
(A*C)
1/(1+r)n (B*C)

(A) (B) (D)

(C) (E)
2018 0 2,500,000 1 0 2,500,000
2019 1,000,000 200,000 0.9091 909,100 181,820
2020 1,000,000 200,000 0.8264 826,400 165,280
2021 1,000,000 200,000 0.7513 751,300 150,260
2022 1,000,000 200,000 0.6830 683,000 136,600
2023 1,000,000 200,000 0.6209 620,900 124,180
Total 5,000,000 3,500,000 n.a. Total Total
Discounted Discounted
Benefits = Costs =
3,790,700 3,258,140

B-C Ratio = tdB/tdC = 3,790,700/3,258,140 = 1.16

 EXERCISE : B-C Ratio
Alternative 2

Instruction: Compute the B-C Ratio.

YEAR BENEFITS COSTS df Discounted Discounted Cost
Benefits

(E)
(A) (B) (C) (D)
2018 0 3,000,000
2019 1,000,000 100,000
2020 1,000,000 100,000
2021 1,000,000 100,000
2022 1,000,000 100,000
2023 1,000,000 100,000
Total 5,000,000 3,500,000
Total Total
Discounted Discounted
Benefits = Costs =
QUANTITATIVE METHOD:
COST-EFFECTIVENESS
ANALYSIS
 COST-EFFECTIVENESS ANALYSIS (CEA)

• CEA is best used to find the most efficient

way of utilizing public resources to reach
intangible goals or effects.

• Two forms:

►Cost Effectiveness Ratio (C-E Ratio)- finding the

option with the least coast

►Effectiveness-Cost Ratio (E-C Ratio) - finding

the option with the maximum effectiveness
Source: Iglesias, 2001
 CEA PROCEDURES

1. Discount all costs.

2. Set effectiveness targets.
3. Eliminate the options that are not adequate.
4. Specify the type of analysis: Least-cost,
or Maximum effectiveness analysis?
5. Compute the C-E and/or E-C ratios.
6. Use the decision rules for each ratio.
7. Make the recommendation.
Source: Iglesias, 2001
 FORMULA: C-E RATIO

Total Discounted Costs

• C-E Ratio =
Targetted Effectiveness

• Least cost
• The unit of the ratio is the cost

Source: Iglesias, 2001

 FORMULA: E-C RATIO

Targetted Effectiveness
• E-C Ratio =
Total Discounted Costs

• Maximum effectiveness
• The unit of the ratio is the unit of effectiveness
(e.g., number of people served, percentage,
etc.)
Source: Iglesias, 2001
 TECHNICAL RATIONALITY

STANDARD OF TECHNICAL
ANALYSIS USAGE
ADEQUACY RATIONALITY

Least-Cost Set a target level of Choose the option that Fixed-effectiveness

effectiveness entails the least cost
(C-E Ratio) problems
(benefit), then (with lowest C- E
eliminate all the Ratio)
options that fail to
meet it

Maximum- Set a ceiling for the Choose the option Fixed-cost problems
Effectiveness costs (budgetary, that produces the
(E-C Ratio) personnel, or most benefit (with
equipment highest E-C Ratio)
constraints), then
eliminate all the
options that exceed it

Source: Iglesias, 2001

 EXERCISE 6: COST-EFFECTIVENESS ANALYSIS
Instructions: Compute the C-E and E-C Ratios. Follow the questions below.

Discounted Estimated
Alt. E-C Ratio C-E Ratio
Costs No. of
Passengers
1 50,000 75,000
2 200,000 584,000
3 500,000 753,000
4 250,000 638,000

Questions:
A. If the management decides to choose a new route, which do you think is the best route
that can serve at least 500,000 passengers? What type of analysis is this? Which ratio
is needed?

B. If the management decides to choose a new route, which do you think is the best route
that can fall within the budget limit of not more than P400,000? What type of analysis is
this? Which ratio is needed?

C. Which alternative is the best according to E-C Ratio and C-E Ratio? Source: Florano, 2004-2018
QUANTITATIVE METHOD: PRINCE
POLITICAL ACCOUNTING SYSTEM
 PRobe, INteract, Calculate, Execute
(PRINCE)

• Developed in the 1970s by William Coplin

and Michael O’Leary, “Political Analysis
through the PRINCE System”

• It allows one to predict how likely the

decision is to be made, to be rejected, or
to continue as an unresolved controversy.

Source: Coplin & O’Leary, 1983

WHEN TO USE THE PRINCE SYSTEM?

1. Where you have a specific objective in

which decisions by several people will
determine your success.

2. Where you feel your objective is

sufficient to you that building a coalition
formally and applying the system are
worth the effort.
Source: Coplin & O’Leary, 1983
 STEPS
1. Define the issue and specify the alternatives
2. For each alternative, identify the policy
players (stakeholders & actors)
3. Estimate issue position, power, and
salience/priority for each player
4. Calculate the weights for each actor and the
whole system
5. Calculate the Probability of Support (POS).
Interpret.
6. Make a decision/recommendation.
Source: Coplin & O’Leary, 1983
 Step 3: Estimating Issue Position,
Power, and Salience/Priority
• ISSUE POSITION—current attitude of the player
toward the policy alternative
Rating (from Description
+5 to -5)

+5 Firmly in favor of the issue and

unlikely to change
+4, +3, +2, +1 Lower level of firmness of the
player’s support
-5 Firm opposition
-1, -2, -3, -4 Lower degrees of opposition
0 Neutral position
Source: Coplin & O’Leary, 1983
 Step 3: Estimating Issue Position,
Power, and Salience/Priority
• POWER—degree to which the player, relative to the other
players can directly or indirectly exert influence on the
adoption of the policy alternative
Rating (from Description
1 to 5)
1 Slight amount of power
2 More than minimum power
3 or 4 Substantial power
5 Can veto or prevent the implementation of
policy with little or no interference by other
players

Source: Coplin & O’Leary, 1983

 Step 3: Estimating Issue Position,
Power, and Salience/Priority
• SALIENCE/PRIORITY—importance that the
player attaches to supporting or opposing the
policy alternative relative to all other alternatives
with which the player is concerned.
Rating Description
(from 1 to 5)
1 Slight interest or concern for the issue
2 With some concern
3 or 4 Substantial concern
5 Assign the highest priority to the issue

Source: Coplin & O’Leary, 1983

 PRINCE POLITICAL MAP

+5 I. II.
I +4 SUPPORTER, LOW SUPPORTER, HIGH
S POWERAND/ OR POWERAND/ OR
S +3 PRIORITY *RESIDENT PRIORITY
U +2
E
+1
*CONGRESS
P 0
*AFP
O -1
S *MALACANAN
-2
I
T -3
*ARMS IV.
I -4 III.
MANUFACTURER OPPOSITOR, HIGH
O OPPOSITOR, LOW
-5 POWERAND/ OR POWERAND/ OR
N
PR2IORI4TY 6 8 10 12 14 16 18 20 22PR2IO4RIT2Y6
POWERX PRIORITY
PROPOSED POLICY: Create an anti-gun law (Source: Coplin, & O’Leary,
1983, and
 SAMPLE CALCULATION

Alternative 1: Create an anti-gun law.

Issue
Prince
Score
Players Position x Power x Priority =
Congress 1 3 1 3
General Public 3 3 3 27
Malacańang -1 3 1 -3
Arms -3 1 3 -9
Manufacturer
AFP (0) 3 3 (9)

Source: Florano, 2004-2018

 CALCULATIONS
• Calculation 1: Prince Score = Issue Position X Power
X Priority (see matrix)

• Calculation 2 = Sum of All Positive Scores Plus 1/2

Neutral Scores
= 3 + 27 + 4.5 = 34.5

• Calculation 3 = Sum of All Scores Ignoring Signs and

Parentheses = 3 + 27 + 3 + 9 + 9 = 51

• Calculation 4: Probability of Support (POS) = Calculation

2 Divided by Calculation 3 = 34.5/51 = 0.6765 or 68%
 PROBABILITY OF SUPPORT (POS) INTERPRETATION

• 100% - Certain to be implemented. (In case of 100%

agreement on a policy, then by definition, there would be
no public policy issue)

• 60%-99% - Likely to be implemented.

• 40%-59% - Uncertain. Likely to continue being disputed

without resolution.

• 1%-39% - Unlikely to be implemented. Most likely to be

killed as a proposal.

• 0% - Never will be implemented. (In case of 0%

support of a proposal, there is no public policy issue.)

Source: Coplin & O’Leary,

1983
 EXERCISE : PRINCE
Instruction: Compute the Probability of Support (POS).

Alternative 1: Create a law mandating high school students to learn Baybayin.

Prince
Issue
Players x Power x Priority = Score
Position

Congress 1 5 2
DepEd 3 4 4
NHC 5 3 5
HS students 0 1 1
Teachers 1 1 1
Parents -5 1 5
Report Writing
POLICY ANALYSIS
WRITESHOP
A Policy Analysis on

Names of Authors
Units/Offices
 PROBLEMATIC SITUATION AND ITS
UNDESIRABLE EFFECTS

• Problematic Situation:

• Undesirable Effects:
PROBLEM TREE AND THE ROOT CAUSE
ASSESSMENTS OF EXISTING POLICIES
THAT ADDRESS THE ROOT CAUSE
EXISTING POLICY RELEVANT ASSESSMENT
PROVISION(S)
 POLICY PROBLEM
AND POLICY ISSUE STATEMENT
• Policy Problem:

• Policy Issue Statement:

 GOAL AND OBJECTIVES
OF PROPOSED POLICY

• Goal

• Objectives
STAKEHOLDERS & ACTORS
• Stakeholders

• Actors
 POLICY ALTERNATIVES
• Alternative 1:

• Alternative 2:

• Alternative 3:
CRITERIA FOR THE ASSESSMENT
OF ALTERNATIVES
 ASSESSMENTS
OF THE POLICY ALTERNATIVES: QUALITATIVE
COST EFFICIENCY ACCEPTABILITY TO POLICY
EFFECTIVENESS (Intangible Cost-Benefit STAKEHOLDERS
ALTERNATIVE
(Policy Delphi) Analysis) (Stakeholder Analysis)

BENEFITS COSTS SUPPORTERS OPPOSITORS

Ben1 Cost1 Sup1 Opp1

Alt. 1: Status quo Cosy2 Opp2
***
Cost3 Opp3

Alt. 2: Abolish X Ben1 Cost1 Sup1 Opp1

by repealing RA Ben2 Cosy2 Sup2 Opp2
*****
123 Ben3 Cost3 Sup3 Opp3
Ben4 Sup4

Alt. 3: Modify X by Ben1 Cost1 Sup1 Opp1

amending RA 123 Ben2 Sup2
****
Ben3 Sup3
Ben4 Sup4
 ASSESSMENTS
OF THE POLICY ALTERNATIVES:
QUANTITATIVE
COST EFFICIENCY ACCEPTABILITY TO
EFFECTIVENESS
(Tangible Cost- POLICY
ALTERNATIVE (Effectiveness-
Benefit Analysis) STAKEHOLDERS
Cost Ratio)
(Benefit-Cost Ratio) (PRINCE Political
Accounting
System)
Alt. 1: Status quo
ECR = 0.5 BCR = 1.5
POS =95%

Alt. 2: Abolish X
by repealing RA
123 ECR = 3.0 BCR = 2.0 POS = 95%

Alt. 3: Modify X
by amending
RA 123 ECR = 1.50 BCR = 3.0 POS = 90%
 ASSESSMENTS
OF THE POLICY ALTERNATIVES

MITIGATING
MEASURES
ALTERNATIVE SPILLOVERS EXTERNALITIES CONSTRAINTS (vs. externalities
& constraints)

Alt. 1: Status
quo

Alt. 2: Abolish
X by
repealing RA
123
Alt. 3: Modify
X by
amending RA
123
 NATIONAL INTEREST ANALYSIS &
FOREIGN POLICY
Countries: Issue/Problem:

BASIC INTENSITY OF INTEREST

INTEREST SURVIVAL VITAL MAJOR PERIPHERAL
INVOLVED
Defense
Economic
World Order
Ideology

Proposed Foreign Policy Statement:

 DESCRIPTION
OF THE BEST/OPTIMAL POLICY
ALTERNATIVE
• Description:

• Reasons for selection:

END