Master's level assignmentThe newly elected President of the United States has asked you to help him or her determine who will be asked to advise him or her in some important matters.  These will not

PADM510 | LESSON 5: DECISION MAKING

Introduction

Topics to be covered include:

• Rational choice

• Decision by analysis

• Decisions on wicked problems

• Network decisions

• Tradeoff analysis

• Agenda setting

Decision making is a continuum of choices – from a simple yes/no or either/or selections to very complicated tradeoffs that require a significant number of steps. The scale of the problem or issue in part determines the scale of the decision process. We will look not only at the scale of problems but also the scale of the analysis that is available to support decision making. The complexity of politics determines what comes to the agenda to be discussed. Not every issue makes it to the realm of public consideration. We will explore what does get there and why. Decision making is sometimes seen as an easy process. However, in a system with checks and balances, public accountability, and requirements to justify selections, decision making is never simple.

Rational Choice

We have looked at rational choice in earlier lessons. Rational choice is making a decision based on factors that are primarily economic. For example, when you shop for something you consider the price. If the price is too high, you will not buy it. However, what is the definition of “too high?” It may be that your bank account determines what is too high a price. It may be that the value of the goodwill determine if the price is too high – will it last, do I need it, is it pleasing? Economists assume that people act as a “rational economic man” and weigh their choices on the basis of price and value and maximize their utility or what is important to them (Krugman, 2007).

We can apply the concept of rational choice to many government decisions. For example, tax too high or am I satisfied with what I get for the taxes I pay? This is not a clear-cut choice. Government value is a large scale concept. Public goods – such as defense, clean air, police, streets, and public schools – are used by all, but not valued the same way by all. Some people believe we need a great deal of defense through ground forces, nuclear bombs, and warships. Others prefer that there be lots of attention on clean air protection, more inspections, and regulations. How do we measure what is rational? Individual goods provide specific benefits to specific people – such as veteran benefits, welfare, and public transit. While society benefits from these goods, specific people get particular benefits. We assume that they will rationally choose these because they get a preponderance of benefit from them. While we may be able to identify rational choice (price versus value) in private goods, it is not as easy to identify that choice with public goods that are shared or even for government services that are tailored to specific constituencies.

Satisficing and Beyond

Herbert Simon, in an earlier lesson, claimed that there never is one perfect choice to be made. Instead, public administration decisions reflect “satisficing” (Simon, 1956). Recall that satisficing is finding a solution and making a decision that serves as many people as possible without doing harm to others who do not benefit. In this way, government decisions serve the greater good, but not at the expense of those who are vulnerable. For example, the government provides a certain level of welfare to qualifying people. The level of benefit, however, is tempered by what the majority of people find to be a level they can be comfortable with – enough to help people, but not so much as to stifle initiative. Of course, there is no formula to determine this. Here, the intuitive feeling or taking the public pulse determines what the particular tradeoff will be.

Beyond satisficing, public policy decisions can be made based on the well-being of people and not just their economic improvement or decline. By looking at what people want beyond economic needs allows us to make policy and budget decisions that give priority to services and the human condition outside of the context of rational decision making. The Organization for Economic Cooperation and Development (OECD), in looking at sustainable development, suggests that,

“Measuring the sustainability of well-being over time requires examination of a range of indicators…” including, “economic, human, environmental, and social capital.” By doing so, government processes will “take into better account of the interests of a broad constituency of stakeholders” (Boarini, Kolev, & McGregor, 2014, p. 13).

Making the rational choice or taking the pulse in order to satisfice are simplified forms of decision making that are not entirely useful in making actual program decisions. In order to craft the parameters of a program, a much more precise level of analysis must be performed in order to guide decision making.

Decision by Analysis

There are a vast number of ways that analysis can be prepared to examine program and policy elements and make decisions about them. Here, we are going to review some of the most common forms of analysis that clearly enable decisions to be made.

One of the most commonly used forms of analysis in both the private and public sector to make a decision is a SWOT analysis: identifying strengths, weaknesses, opportunities, and threats (Helms and Nixon, 2010). While there may be weaknesses, the opportunities may outweigh them and the program will go forward. Threats may be such that they outweigh the strengths. For example, we can look at veterans’ health care. Recently there has been a great deal of concern that vets have to wait too long for care at Veteran Affairs (VA) hospitals and that this is both a health problem and a political problem. In fact, there were a number of high ranking administrators that were fired because of a very long delay in getting care in California VA facilities. (Walsh, Murphy, Bisaha, & Quil, 2017). Let’s look at a SWOT analysis of the problem.

Veteran Example

In looking at this analysis, it is apparent that the threats are going to outweigh any of the strengths and opportunities and will drive the decision process. This is particularly true when the experience in California became a political issue that drove the VA to make some significant changes in leadership as a means of getting the threat under control. This does not necessarily mean the VA will look at innovation or other opportunities unless they will decisively affect the threat.

The SWOT analysis is a great decision tool when there is a complex issue or one with lots of pieces that are not easily managed. It allows program managers to weigh the value of one section against another in order to make decisions.

Scoring with Rubrics

This example of a Criteria-Alternatives Matrix (with no claim to the accuracy of costs and the audience). Using this matrix, Facebook ads would be chosen to promote the vaccination campaign as it has the highest rating.

Another significant form of analysis is called scoring. Scoring uses a rubric or methodology to measure specific elements of what the program or legislation is supposed to do and then rate the value of it on a score sheet. An example is the Criteria-Alternatives Matrix (CAM) (Munger, 2000). This is a useful decision tool when it is clear what is valued and an assessment can be made. In the CAM, all criteria of the problem are considered such as cost, equity, opportunities, and outcomes. Then these are compared and scored against all the solution alternatives that are being considered. The CAM can be a straight comparison or different criteria can be given different weights. Scores on each alternative can be on a scale, can be projected values (cost, savings), or evaluation (best, worst). The scoring formula can incorporate all the different score methods in one cumulative tally for each alternative.

Congressional Budget Office Cost Estimates

Specific to decisions based on budgeting is the Congressional Budget Office (CBO) cost estimate that is provided on every piece of legislation for which a budget item is created by Congressional legislation. The Congressional Budget and Impoundment Control Act of 1974 established the CBO in order to provide necessary budget impact information to the Congressional budget committees. The CBO measures what is defined as important expected outcomes of the legislation, projected costs, projected savings, the number of people likely to be served or not served by the program, and other measures. The 2017 Congressional consideration of health care legislation was dependent on the CBO score that assessed how much the program would cost, how much tax savings or new spending would occur, and most importantly, how many people would no longer have health insurance (if any) due to changes proposed from the existing program (CBO, 2017). CBO scoring is supposed to give legislators detailed information that is non-partisan and clear. However, the CBO conclusions are highly scrutinized and can be used in a partisan fashion to support or oppose the legislation. The rubric is supposed to provide a basis of comparison to examine the impact of proposed legislation and existing legislation or compare competing proposals. In some cases, Congress has created limits for itself such that changes cannot exceed certain limits as measured by the CBO score. These might be limits on total new spending, deficit spending or how much can be added to the debt without new revenue to compensate.

These decision tools enable administrators to look at different elements and angles simultaneously. It allows some comparison as well as weighted assessment in order to come to a final decision that fulfills a need or meets a predetermined outcome (such as cost savings). Using these devices can minimize political wrangling and instead drive decisions with data.

Decision on Wicked Problems

Wicked problems are social issues that are complex and interrelated. There are three important dimensions of these issues that make decision making challenging (Weber & Khademian, 2008).

• First is that they are unstructured – there are no easy causes to identify, so actions or solutions are not readily apparent. The consensus is difficult to achieve and decision makers demand more and more information in order to get a handle on the issue.

• Second is that they are cross-cutting issues. Many people are engaged and committed to the issue or parts of the issue. There is a high potential for conflict because of the multiple policy domains and multiple organizations that are attached to the issues where each stakeholder brings their view and needs as a priority to the decision table. Tradeoffs are necessary and not easy to achieve, especially since the issue is already unstructured with no clear path to a solution.

• Finally, wicked problems are relentless. These are issues that cannot be simply solved because they morph. Just as one remedy gets in place, another related problem arises and threatens to undercut the solution in place. The balance of agreement in the cross-cutting and informal environment is threatened to be undone as new priorities arise.

Wicked Problem Example

Homelessness is a wicked problem. At its simplest, homelessness is the absence of having a home. An easy solution would be to provide a home to everyone that needs one. The first complication would be to qualify under what conditions people are designated homeless and thus qualify for a home. Suppose we could sort the population out appropriately to everyone’s satisfaction to find the people that need a home. Then we have a problem of people who have challenges such as mental health problems and substance abuse. How do we house them? What about people who refuse shelter and live on the street – they are often victims of crimes and cause a public nuisance in some instances. How do we address that? What if homeless people waiting for housing are committing crimes? How do we curb crime amongst the homeless? What type of homes will we create and will they cause a lower property value for nearby houses? How will we locate homes for homeless people with a neutral impact on others? Homeless people need jobs, health care, transportation, childcare, protection from violent partners, and help with a host of other social problems. A lack of housing is a symptom of deeper problems. How will those be solved? Homelessness is a wicked problem that cuts across several policy areas and priorities morph when a solution is implemented. This does not mean that wicked problems cannot be addressed. They can. For instance, the federal program that assists cities in providing housing for the homeless has required a cooperative and network strategy that provides a “continuum of care” to address the multiple facets of the problem. Mental health agencies, medical agencies, housing providers, social workers, employment support agencies, police, hospitals, and charitable groups all work together to organize the types of care that are needed to reduce homelessness. It does not eliminate the problem, but it does provide a level of coordinated service planning to be efficient and effective.

Wicked Problems and Decision Makers

Wicked problems represent a conundrum for decision makers. There are no best answers and there is no easy way to satisfice. Once a decision is made and implemented, it is nearly inevitable that new issues will result from that decision. A new round of decision making has to be made that will address the new issues without compromising the original solution too much. An issue such as environmental health problems constitutes a wicked problem (Kreuter, DeRosa, Howze, & Baldwin, 2004). The recent crisis in Flint, Michigan is an example (Steinberg, 2017). The complexity of the problem was not evident at first. It seemed like a problem of water sourcing and cleaning that source. Then it turned into a problem of lead pipes creating too much lead in the water. Then it became medical problems such as rashes and later, permanent lead poisoning damage to children. So while the water source can be treated, there are other barriers that complicate the treatment and likelihood of a successful outcome. Add to this that the population is poor and does not have access to medical care and alternative water sources, the problem spiraled into a crisis that is still not resolved and probably not be in the near future.

Decision makers are left with an ever-increasing number of new problems and barriers when trying to determine what is the best solution to a wicked problem. Some of these problems will not be solved quickly. An approach may be implemented and not monitored. New problems arise, but only the first solution is in place. Funding may not be available for the other components of a wicked problem or the new problems that arise. Sometimes decisions get frustrated by the enormity of the problem and without a clear path to creating a meaningful impact, government administrators will provide a minimum approach and give up. This may be the most difficult reality of decision making to accept. We assume that decision processes, strategies, and analysis will get us from problem to solution. This is not often realized. Instead, decision-makers accept compromises, trade-offs, satisficing, and accede to the realization that sometimes a wicked problem cannot be fully solved.

Network Decisions

In an earlier lesson, we learned that the origins of the public bureaucracy created a rigid and hierarchical decision structure with rules and processes of decision making. Today, public administrators are adopting network decision making as an important option for complex problems that defy a one size fits all decision structure.

Networks of decision making are “flexible, efficient, and innovative organizing hybrids that enable participants to accomplish something collectively that could not be accomplished individually” (Weber & Khademian, 2008, p. 334).

The primary value of a networked decision system is that knowledge is accumulated and shared (Weber & Khademian, 2008, p. 337). It actually becomes “network knowledge” that is owned by the group. This democratic styled system facilitates collaboration that is crucial in a complex problem setting (Weber & Khademian, 2008, p. 338). Transferring this knowledge is sometimes antithetical to public administrators that have known knowledge to be power in the policy and program process. Sharing information could diminish their priority in the queue of what is funded and sustained. But competition does not work in a complex policy environment where participants from multiple departments and agencies are needed to work on solutions and decisions (Weber & Khademian, 2008, p. 339).

The value of networked decision making is the “capacity to integrate disparate knowledge…” for “collaborative problem solving, such that the integration of existing knowledge and the creation of new knowledge can occur” (Weber & Khademian, 2008, p.340).

Hierarchical decision making has no capacity for creating new knowledge. Complex problems require new knowledge and a system that can rapidly adjust as new knowledge comes in. Therefore, networked systems provide an important option for administrators to be effective in addressing complex issues.

Game Theory

A sophisticated way of addressing decision making is to use game theory (McCain, 2016). The idea is that decisions made by multiple participants can be assessed using mathematical models to predict outcomes. A computer simulation can run all the options to determine which decision will produce which result. The computer simulation is set up with a series of assumptions such as lowest cost is optimal or most people served is optimal. The level of sophistication of a computer model enables decision makers to create a game to determine if this is in place, then that will occur. For instance, a simple assumption is that people prefer lower taxes as long as they get a minimum level of services that provides an environment that satisfies them. There are an infinite number of permutations to this game in terms of quality, cost, and outcome. Game theory enables administrators to run scenarios and see the solutions and impacts while controlling for sensitive variables such as time, tax rates, population growth, income variation, and so forth. The general aim of the game is to reduce loss and maximize benefit.

Cost-benefit Analysis

Another decision analysis process that examines tradeoffs is a cost-benefit analysis. This is a staple in public administration that serves to project the costs of implementing a decision and to weigh it against the benefit of implementing that decision (Fuguitt & Wilcox, 1999). The simplest method of cost-benefit analysis is to measure the financial costs of a program and weigh it against the number of people served. The more sophisticated analysis could include opportunity costs – what else could the money be spent on instead of this item. Would that be more valuable? The analysis also could look at benefits to society of having this program in place. Will it improve health, save lives, improve future options? Costs and benefit definitions can be broadened to include both secondary and tertiary costs and benefits that may be indirect and intuitive.

For instance, in 1981 President Ronald Reagan issued an executive order that declared any new administrative rule would have to be revenue neutral by virtue of a cost-benefit analysis (Executive Order 12291, 1981). If costs exceeded benefits, the rule or regulation could not be implemented. This was designed to limit new regulations that were seen as too costly to implement, even though they may serve a good purpose. It forced bureaucrats and administrators to consider the cost of the regulation to the government at the state and local level as well (Shabecoff, 1981). It was criticized as a way to capitalize on analysis to justify political decisions because data was easily manipulated. What constitutes costs and benefits may be in the eye of the beholder.

Tradeoffs in Administrative Decisions

Tradeoffs are a staple of political decision making as one possible element of legislation is weighed against another and traded or bargained for by politicians. Tradeoffs in administrative decisions require determining if one approach to a problem or one budget item is more useful than an alternative. These decisions do not always have the luxury of time for significant analysis. For example, in a disaster situation, first responders have to trade off their safety for rescuing victims. Another example is in determining if extending hours of operation of a local service is worth the cost. Sometimes these types of decisions are based on instincts and are highly biased by the person making the decision. First responders may have to make an instant decision and, based on their professional experience, determine what to do.

An administrator making a small decision such as hours of operation may have a bias based on personal preference or personal assessment of the situation and not even know they are biased.

“Objectives for public policy are forged in political conflict and are constantly changing, not handed down on a stone tablet. Even if we assume a very narrow objective, such as a good book collection, that objective is subject to competing interpretations. What kind of book collection? And good for whom? And even if we settle these questions, how do we measure the costs and benefits of any library policy, given that costs are simultaneously benefits to someone else, that benefits extend in an infinite chain, and that costs conceived as forgone opportunities are limited only by our imagination?” (Stone 2002, p. 65)

Stone’s comments are in reference to a famous study done in 1973 on the Oakland library and whether they should close branches (Levy, Meltsner, & Wildavsky, 1973). By looking at book checkouts as the measure, it would seem branches in certain poor neighborhoods would be closed because their measure was low. When patrons were interviewed, they explained they wanted more books to be included that they were interested in and they would check them out. The authors criticize the library administration for their bias and not understanding that different patrons have different expectations.

What are the types of biases that might obstruct an administrator from making a decision that serves a diverse population? Consider diversity in terms of age, gender, race, and economics.

Agenda Setting

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• Getting an Issue on the Agenda

Decision-making processes and analysis are very useful when administrators know what issues are in front of them. But how does the issue come to require a decision? Why do some issues rise to get attention and others do not? One explanation is that issues must be put on the agenda for attention before they reach the level of decision making. How issues get to the agenda is often a political process.

An agenda is “the list of subjects to which people in and around government are paying serious attention at any given point in time” (John Kingdon 1984, p. 174).

Getting Attention for Your Issue

The axiom, the squeaky wheel gets the grease, is an easy way to contemplate agenda setting. If you make enough noise, ask questions, are persistent, then your issue is more likely to get attention than if you patiently wait your turn. Lobbyists and interest groups practice the squeaky wheel strategy and spend millions of dollars each year to get the ear of legislators, to get their point of view heard, and to make the case that their issue deserves resources, regulatory attention or relief, and program support (Cobb & Elder, 1971). This requires constant pressure and presence and noise making. At some point, there is the risk of so much noise in the policy arena that no one is heard or that constant noise on an issue leads to fatigue in hearing about it. Either way, there is likely to be no action taken.

Timing Strategy

In agenda politics, it is more productive to have a timing strategy. One strategy is to craft your policy solution or change that you want and then wait. You wait until the political climate is ripe for your issue and then you make your voice heard. The climate can become ripe when an incident occurs such as a natural disaster or a medical emergency. A tragedy can make decision makers more likely to look for solutions to issues that arise in areas such as healthcare, infrastructure, or safety regulations. An earthquake could create a listening for new regulations, new road construction techniques, and electric grid improvements that otherwise would not be heard outside of an emergency condition. The climate can become favorable for a policy approach when new data emerges that measures the problem in a way that elevates the size or scale of the problem, prompting decision-makers to look for new solutions. Kingdon (1984) refers to this as an open policy window that opens when situations change and through which the policy option can gain access to decision makers.

Policy Entrepreneurs

Kingdon (1984) also identifies who was likely to be successful at getting issues onto the agenda. He identifies policy entrepreneurs as elected officials, policy experts, and interest agents (p. 188-190). First, they have “a claim to a hearing” meaning that they have access to as an expert or a position of authority that makes it likely they will be heard. Second, they identify someone with political skills in negotiating and connections in the political realm. Third, they are persistent – “sheer tenacity pays off.” It pays off because it is a sign that the agent is willing to invest resources. Entrepreneurs are motivated by a variety of reasons including a personal passion for the topic or carrying the message for an interest outside of government.

Conclusion

Making decisions in government is a process filled with pitfalls. Analysts and administrators have created a number of different devices to help in making decisions that can be justified. The premise of how decisions are approached begins with an assumption of rationality and ends with how decisionmaker bias can affect the analysis. We have examined a number of different decision analysis tools to create objective measures on which to base decisions. These include a cost-benefit analysis and game theory. Other decision tools, such as the Criteria-Alternatives Matrix, rely on developing a score using a rubric to make an assessment. Finally, there are decision tools that allow for a multi-faceted examination to weigh considerations. A SWOT analysis allows for competing factors or considerations to be examined simultaneously and considered.

Decision making is not routine and not always perfect. The quest to provide the most valuable criteria or the most objective analysis is tempered by the human element in the assessment. Decision-making administrators and legislators have opinions and hold their own positions on issues. These will necessarily enter into the decision making an equation, even when objective criteria are offered. Lindblom (1979) may have said it best, that we are “muddling through” in the effort to be good decision makers.

References

Boarini, R., Kolev, A., & McGregor, A. (2014).Measuring well-being and progress in countries at different stages of development: Towards a universal conceptual framework. OECD Development Centre Working Papers, No. 325, OECD Publishing, Paris.

http://dx.doi.org/10.1787/5jxss4hv2d8n-en

Cobb, R.W. & Elder, C. (1971). The politics of agenda-building: An alternative perspective for modern democratic theory. Journal of Politics, (33),892–915. doi: 10.2307/2128415.

Congressional Budget and Impoundment Control Act of 1974, 88 Stat. 297 (1974)

Congressional Budget Office. (May 24, 2017). H.R. 1628 American Health Care Act of 2017. Congressional Budget Office Cost Estimate. Retrieved from https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/hr1628aspassed.pdf.

Executive Order No. 12291 of Feb. 17, 1981,46 FR 13193, 3 C.F.R., 1981 Comp., p. 127. Retrieved from https://www.archives.gov/federal-register/codification/executive-order/12291.html

Fuguitt, D., & Wilcox, S.J. (1999). Cost-benefit analysis for public sector decision makers. Westport, CT: Quorum.

Helms, M.M. & Nixon, J. (2010). Exploring SWOT analysis: Where are we now? Journal of Strategy and Management 3(3), 215-251.

Kingdon, J. (1984). Agendas, alternatives, and public policy. Boston, MA: Little, Brown & Co.

Kreuter, M.W., DeRosa, C., Howze, E.H. & Baldwin, G. (2004). Understanding wicked problems: A key to advancing environmental health promotion. Health Education and Behavior 31, 441-454.

Krugman, P. (2007, February 15). Who was Milton Friedman?.New York Review of Books. Retrieved from http://www.nybooks.com/articles/2007/02/15/who-was-milton-friedman/.

Levy, F., Meltsner, A. & Wildavsky, A. (1974). Urban outcomes. Berkeley: University of California Press.

Lindblom, C.E. (1979). Still muddling, not yet through. Public Administration Review 39(6), 517-526.

McCain, R.A. (2015). Game theory and public policy (2nd ed.). Northhampton, MA: Edward Elgar.

Munger, M. (2000). Analyzing policy. New York: W.W. Norton & Company.

Shabecoff, P. (1981, November 7). Reagan order on cost-benefit analysis stirs economic and political debate. The New York Times

Simon, H. (1956). Rational choice and the structure of the environment. Psychological Review 63 (2),129–138.

Steinberg, S. (2017, August 31). The report touts policies to prevent childhood lead exposure. The Detroit News. Retrieved from http://www.detroitnews.com/story/news/michigan/flint-water-crisis/2017/08/31/report-policies-prevent-child-lead-exposure/105147464/.

Stone, D. (2002). Policy paradox: The art of political decision making. New York: W.W. Norton & Co.

Walsh, S., Murphy, P., Bisaha, S., & Lawrence, Q.(2017, January 31). VA hospitals still struggling with adding staff despite billions from Choice Act. National Public Radio, Morning Edition. Retrieved from http://www.npr.org/2017/01/31/512052311/va-hospitals-still-struggling-with-adding-staff-despite-billions-from-choice-act

Weber, E.P. & Khademian, A.M. (2008). Wicked problems, knowledge challenges, and collaborative capacity builders in network settings. Public Administration Review 68(2), 334-349.