● Two “models” of Immigration
○ Neoclassical: people migrate based on cost-benefit calculations.
■ Immigration decisions based on “pull” factors
■ they migrate where they expect the greatest returns over a specific period
of time
■ migration decisions according to this theory are taken by the individual
and stem from differences in labour markets.
■ Costs of migration include also social and emotional costs.
○ Alternative model: immigration is based on “push” factors.
■ Immigration based on diversifying risk at family level
■ Decisions to migrate are social.
● Three waves of education policy
○ 1st wave: 80s; a nation at risk; pointed out 4 areas of failure:
■ Curriculum is too easy, too much choice
■ Expectation and standards were too low
■ Use of time: school days & classes were too short
■ Teaching is poor quality, poorly educated
○ 2nd wave: 90s; trying to reform school government; looking for alternatives to
traditional public schools. Created 2 problems
■ local schools boards: politicians always meddlings
■ Teachers union: were protecting bad teachers
■ Policy alternatives:
● Charter schools: often specialized; often non-unionized; control by
states
● Voucher programs; subsidized tuition to private school
○ 3rd wave: 2000s; enforcing standards, accountability, standardized testing
■ No child left behind: schools need to show they were proving to meet
standards improvement; school performance in ensured by tests
■ Schools that fell behind were shut down
■ Race to the top: state schools compete to get more federal money to
improve schools; must tie teachers performance equals to tests.
■ Common core: states set up standards; emphasizing critical thinking
● DACA:
○ In 2012, President Obama created the Deferred Action for Childhood Arrivals
program, which allowed a specific group of young immigrants without status,
who were brought to the United States as children to apply for work authorization
permits and protection from immediate deportation.
○ Trump ended DACA in 2017; however, the federal court have kept it in place
● Charter schools
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○ Charter schools are public schools that are independent of school districts through
contracts with state or local boards.
○ charter schools are open to all children, do not require entrance exams, cannot
charge tuition, and must participate in state testing and federal accountability
programs.
Common core
○ High standards that are consistent across states provide teachers, parents, and
students with a set of clear expectations to ensure that all students have the skills
and knowledge necessary to succeed in college, career, and life upon graduation
from high school, regardless of where they live.
Moral Hazard
○ occurs when someone increases their exposure to risk when insured, especially
when a person takes more risks because someone else bears the cost of those risks
○ It arises when both the parties have incomplete information about each other
Keynesian Economic Theory
○ Says the government should increase demand to boost growth. Keynesians
believe consumer demand is the primary driving force in an economy.
○ Market subject to boom & bust cycles
○ Gov’t should manage economy
○ People are emotional
○ Economic crisis punish both good and bad
○ Economic crises may linger
Free market theory
○ an economic system based on supply and demand with little or no government
control meaning that individuals make economic decisions.
○ Market leads to efficient outcomes
○ People are rational
○ Economic crisis punish bad and therefore lead to economic efficiency
○ Economic crises would resolve themselves
Fiscal policy
○ the use of government revenue collection and expenditure to influence a country's
economy. This means that the gov’t adjusts its spending levels and tax rates to
monitor and influence the country’s economy.
○ Using taxest
○ Spending to fix economy
○ If unemployment is high: lower taxes, cut spending
○ If inflation is high: raise taxes, cut spending
Monetary policy
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○ Policy that controls either the interest rate payable on very short-term borrowing
or the money supply, often targeting inflation or the interest rate to ensure price
stability and general trust in the currency.
○ Changing money supply and interest rates to improve economy
○ If unemployment is a problem: lower interest rates, increase money supply
(printing money)
○ If inflation is a problem: increase interest rate, decrease money supply
Comparative advantage
○ This is a way the U.S. has supported free trade policy. When a country produces
service or good for a lower opportunity cost than other countries.
○ the ability of an individual or group to carry out a particular economic activity
(such as making a specific product) more efficiently than another activity.
○ EX: oil-producing nations have a comparative advantage in chemicals. Their
locally-produced oil provides a cheap source of material for the chemicals when
compared to countries without it
Protectionism
○ policy of protecting domestic industries against foreign competition by means of
tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the
imports of foreign competitors
○ Tariff or tax on goods from other countries
○ Viewed as economically inefficient higher costs due to less competition and
retaliation
Argument for Protectionism
○ Some industries are necessary in national interest (e.g. defense industries)
○ Infant Industry argument: if we do not protect our industry then other countries
would come in and dominant
○ Free trade policies are inconsistent with social welfare
Tax expenditures
○ provisions of the tax code such as exclusions, deductions, deferrals, credits, and
tax rates that benefit specific activities or groups of taxpayers
○ Subitizing activities through the tax code
○ This is one-third of the gov’t budget
○ EX: home mortgage interest deduction meaning that if you get a mortgage, you
will get a tax break
○ EX: employer provides healthcare
Sequester
○ Cannot reach an agreement, cut spending across the board
○ involves setting a hard cap on the amount of government spending within broadly
defined categories; if Congress enacts annual appropriations legislation that
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exceeds these caps, an across-the-board spending cut is automatically imposed on
these categories, affecting all departments and programs.
Discretionary spending
○ President and congress decide what to cut
○ must be approved by the Congress every year in the appropriations process and,
unlike most mandatory spending, is subject to a predetermined limit each year.
○ EX: national defense, foreign aid, education and transportation.
Mandatory spending
○ Government spending on certain programs that are mandated by law
○ Generally governed by statutory criteria; it is not normally set by annual
appropriation acts.
○ Mandatory spending includes entitlement programs, such as Social Security,
Medicare, and required interest spending on the federal debt
○ smaller programs (unemployment compensation, retirement programs for federal
employees, student loans, and deposit insurance
Paris climate accord
○ To reduce emissions to a level that would lead to a 2 degree increase over preindustrial levels
○ Each country set individuals goals; no real enforcement mechanism
○ Developed countries assists developing countries
Justifications for Public Policy:
○ Public Goods and Free riders problems: being in or out of a union (non-rivail; non
exclusive)
○ Externalities: a side effect of an industrial activity that affects other parties
without it being reflected in the cost of the goods involved. In other words cost
and benefit if something outside decision-making.
■ Positive: under-provided
● EX: education
■ Negative: over-provided
● EX: pollution
○ Natural Monopolies: cost declines with more users you have.
■ EX: cable tv or phone company (when you add more people, the price
goes down)
○ Information Issues: information asymmetry based on what people know (people
not knowing what's best for them.
Government Failures:
○ Majority abusing its power: can impose cost on minority that's not fair
○ Excess interest group power: putting off cost (EX: over regulation)
○ Problems of gov’t production: gov’t produces things that are methods of
delivering policies.
● Options/Tools for Public Policy
○ Direct Service: gov’t set up a program & provide for people
○ Taxation: another way of providing
○ Regulation: this is another way of providing
○ Subsides & Grants: give people $ to do what they want
○ Providing Information: gov’t provide information so that people can make good
decisions.
○ Changing structure of Private rights: what you can and cannot do on your
property
○ Changing Framework of economic activity: this is related to regulation
○ Financing & contracting: subsidizing the private sector to provide services
○ Bureaucratic & Political reforms: fixing bureaucracy.
● Bureaucracy: members of gov’t not appointed. Civil servants who carry out the policy
● Reinventing gov’t: try to empower front line workers; less on bureaucracy creative rules;
decrease size of gov’t
● Encouraging savings: automatic enrollment; save more tomorrow
○ Requiring students to apply for college to graduate high school
○ Gambling self-bans
○ $1 per day for not getting pregnant
○ Civility check for emails
● Moneyball: new agenda
● Libertarian paternalism: is the idea that the gov’t is the parent, meaning that it is
possible for the private and public sector to affect behavior while also respecting freedom
of choice, as well as the implementation of that idea.
● Choice architecture: the design of different ways in which choices can be presented to
consumers, and the impact of that presentation on consumer decision-making (Ex:
number of alternatives, decision aids, choice over time
● Social experiments: tests human’s reaction to certain situations or events. Typically done
by having two different groups, have one participate in the event and the other react react
to the event/program
● Conducting social experiments:
○ Step 1: Identify & operationalize dependent variables
○ Step 2: Identify & operationalize independent variables
○ Step 3: Set up experiment & control groups - must be equivalent in compositionsame types of people in each - random assignment is best
○ Step 4: Subject experiment and control groups to different conditions on
independent variable & see how its affect dependent variable
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○ Used uneven setting up experimental && control groups is not possible (EX: state
composition before/after studies)
○ Do an experiment that focuses on how at risks kids are aware of prison conditions
■ Do a survey of at risk kids who have done the program and see the impact
of the program on them
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Issues with social experiments: is it valid?
○ Internal validity: you are measuring what you think you are measuring. (things
you operationalize is what you are trying to do)
■ Possible threats:
● Environmental change: longer experiments goes, higher chance of
other things to conflict with it
● Samples may not be equivalent
● Hawthorne effect: people act differently when they know they are
being watched.
○ External validity: results don’t hold outside experimental situation. (can be a
result of selection biases; experimental & control groups not representative of a
larger population.
Ethical issues in social experiments:
○ Need to provide voluntary and formed consent
Cost Benefit Analysis: process by which organizations can analyze decisions or
determine a value for intangibles.
○ Lists all coast and all the benefits of a policy
○ Assign a dollar value to them
○ Calculate net cost or benefit
○ If benefits outweigh costs, do it if costs outweigh benefits, don’t do if it's the
opposite.
○ EX: Legalizing marijuana
■ Benefits: tax $, reduced cost to judicial system law enforcement, revenue
from regulations, jobs associated with industry
■ Costs: public safety risks DUIs; health costs; 2nd hand smoke, regulatory
costs; loss of productivity;
○ EX: State plastic shopping Bag Exercise
■ Benefits: no more extensive little problems; environment impact; revenue
500x12 = 6 billion x .05 (goes down); paper bags have environmental
costs; jobs in paper industry; landfill costs reduced/environmental benefits
■ Costs: paper bags cost more $50x12 million people = 600 million (goes
down); jobs in plastic industry; jobs of landfill; accessibility convenience;
regressive tax
Issues in cost-benefit analysis
○ Valuing human life
○ Comparison costs & benefits in present & future. (EX: discounting)
○ Present benefit = future benefit x 1/(1 + r)𝑛
■ N- # of years; r = discount rate
■ EX: $1,000; future benefit X 1/(1+ r)𝑛; 1000 x (1+2)5
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● Alternative to cost-benefit analysis
○ Break even analysis: how much benefit would you need to justify the cost & is
reaching that realistic
○ Cost effectiveness analysis: look at the cost per unit of benefit
■ Installing seat belts in cars; cleaning up hazardous waste dumps
○ Cost-benefit ratio: combats bias towards large protests
■ Build a dam: $1 billion benefits, $500,000 cost: nets $500,000
■ Put a stop lights $50,000 benefit; $10,000 cost; net $40,000
● Paradox: we spend a lot, but outcomes are not good
● Social Welfare Policy Overview
○ Social insurance programs: get it whether you need it or not (EX: social security)
○ Means tested programs: must prove that you need it. Targeted towards the poor.
(EX: food stamps/SNAP; earned income tax credit)
○ 1930→ New Deal: created social insurance programs
○ 1960→ war on poverty/great society: created many means tested programs
○ 1990s→ personal responsibility and work opportunity act: make welfare more
work focused; time limits on welfare
● Pure UBI: not means tested. You get it no matter what. Everyone gets some benefit
regardless of income
● Negative income tax: means tested; provides a floor, but benefit is reduced depending on
work income
○ EX: earn 10,000; make $20,000 (half is subtracted from benefit) → 10,000;
benefits = $2,000; total income = $22,000
● What is a faction?
○ Groups of people who are united to protect and promote their own interests and/or
political opinions (at the expense of others).
○ Why were James Madison fearful of factions?
○ Factions were to work against the public interest and violate the rights of others—
in particular, those of minorities.
● B
Maslow, Abraham Harold. “A Theory of Human Motivation.” Psychological Review 50.4 (1943): 370-396.
http://psycnet.apa.org/record/1943-03751-001