19-661-RW   ST: Introduction to Policy-making and Policy Analysis

Course description

The purpose of this course is to prepare engineering students to inform and engage in the policy-making process, either from inside the government or from outside. We will discuss the roles of government, the private sector, and civil society in promoting public welfare. The course will examine how policymakers design and implement successful policies by working with key stakeholders throughout society. We will survey policy analysis techniques including problems formulated in terms of utility maximization, issues in valuation of intangibles, and decision-making under uncertainty. Most of the material in this course applies reasonably well to policy analysis anywhere on the globe. However, as a CMU-Africa course, we will tend to select case studies from Africa, and course discussion will often center specifically on the African context.

Learning objectives

• Students can recognize real world situations where public policy can remedy market failures and achieve other objectives.
• Where appropriate, students can formulate decision analysis problems as decision trees.
• Students can apply the concept of expected value (or utility) to make choices under uncertainty and can discuss where this approach is more or less appropriate to a problem. Students recognize how decision-makers risk preferences influence choices.
• Students can categorize variables by type (empirical quantities, decision variables, value parameters etc.) and suggest appropriate treatments for uncertainty in each type of variable.
• Students can apply different approaches for handling sensitivity and uncertainty in decision analysis frameworks including tornado diagrams, bounding analysis, crossover analysis, one-way and two-way sensitivity analysis, Monte Carlo etc.
• Students can apply net present value and related concepts from engineering economics to account for the time value of money.
• Students can apply benefit-cost analysis and cost-effectiveness in policy-making contexts.
• Students can value non-market goods using willingness-to-pay (such as VSL) in cost-benefit analysis.
• Students can identify policy instruments that are better suited to specific situations and discuss the strengths and weaknesses of different policy instruments.

Prerequisites knowledge

• Students will be required to use probability density functions and cumulative distribution functions to describe uncertainty in key variables.
• This course does not require any specific computational tools, but students will generally find that Excel is useful for much of the homework.
• Other quantitative skills common to engineers are assumed.
• Otherwise, we do not assume any background in policy, economics, political science, etc. and will introduce key concepts from these fields as needed.

Faculty

Peter Adams