Public Budget As DecisionMaking Process
 Decision - Making Models:




Incremental Change Model
Satisfying Model
Ideal Rational Model
Stages of Problem Solving Model
 Many People use these theories
or models as their guide to
reform public budgeting
 To understand these theories or
models , a criterion must be
developed to judge them and
the concept of conceptual
models itself must be explained
 A conceptual model can viewed
as a tool which enables the user
to understand and deal with
complex phenomena
 A tool can be judged “good’ or
‘bad” in terms of the user’s
purpose
 Professionals should judge
conceptual models or
theories in terms of the
model’s usefulness in
helping them accomplish
their tasks
 These tasks must be
accomplished within a
decision-making context
largely induced by the
ideologies of the culture
 Decision-making models
can be judged in terms of
their applicability to the
decision-making
environment of the public
budget person
 Some major and commonly
noted
decision-making
models are the Incremental
Change
Model,
the
Satisfying Model, and the
Ideal -Rational Model. To
this list, a provocative but
little-cited model called the
“Stages
of
Problem
Solving” can be added.
Incremental Model:
 This model is used for
descriptive
and
normative
purposes ( The former refers to a
model which is constructed for
purposes of explaining and/or
predicting the consequences of
policy choices while the latter is
constructed for purposes of
optimizing the attainment of
some utility ). The model tells us
that the best predictor of what
will happen in the future is what
we are doing now. Our focus
shall be on the normative use of
the model
Main Features of this model:
 Style of policy - making based on
small,marginal changes from
existing policies.
 It narrows the area open to
dispute,
thereby
reducing
conflicts, and that it is consistent
with
the
principles
of
conservatism
 Budget processes were seen as
stable, predictable, changing little
from year to year and based on
well defined roles that could
represented by relatively simple
decision rules
 In developing a budget,
the agency takes the role
of an advocate and the
budget reviewer takes the
role of accommodates
 This model is an excellent
tool for understanding the
political environment of
public policy making, but
it is not useful for
explaining
the
more
technical
difficulties
associated with analysis.
The Satisfying Model:
 Based on certain criterion (
See Figure )
 Select
first
acceptable
alternative, the acceptable is
the standard for judgment.
 This model dramatically
emphasizes that decisions
are made under pressure,
and sever limitations make
achieving
even
a
satisfactory alternative a
significant accomplishment.
The Rational Model:
 The model systematically breaks
decision-making down into six
phases:
1. Establish a complete set of the
operational goals, with relative
weights allocated to the different
degrees to which each may be
achieved;
2. Establish a complete inventory of
other values and resources with
relative weights;
3. Prepare a complete set of the
alternative policies open to the
policy maker
4. Analyze the alternative policies by
making a valid predictions of the
cost and benefits of each
alternative;
5. Calculate the outcome ( net
expectations
)
of
each
alternative;and
6. Compare the net expectations and
make a selection.
 The problem with this model is
that the best alternative often
cannot be achieved because of
practical concerns ( lack of time ).
Stages of Problem Solving
Model: Phases
1. Perception that a problem
exists. This permits the
possibility of multiple value
perspectives;
2. Considering the solutions;
3. Analyze the alternatives;
4.Decide whether to reconsider
the nature of the problem or
to
plan
resolve
the
problem;and
5. Evaluation of outcomes
Phases 4 and 5 are not part of
the rational model. From
evaluation, the decision
maker may either start over
by
reconsidering
the
problem or re-plan his or her
actions steps
Comparative analysis of the four models:
 The incremental model is an excellent tool for understanding the
political environment of public policy making. With this model, the
public budget person can better understand how the budget process is
dominated by the strategies employed by and the conflicts that arise
among participants. Proponents of this model argued: That a process
which concentrates on an increment is preferable to one that attempts to
review the whole budget because it moderates conflict, reduces search
costs, stabilizes budgetary roles and expectations, and reduces the
amount of time that officials must invest in budgeting , thus increasing
the likelihood that important political values will be taken into account.
 The Satisfying and Ideal - Rational Models are useful for
understanding the difficulties associated with decision-making. The
Satisfying Model dramatically emphasizes that decisions are made under
pressure, and
 Severe limitations make achieving even a satisfactory alternative a
significant accomplishment. The problem with model is that one is often
not satisfied that the best alternative has been selected. On the other hand,
the desire for deciding on the best alternative is reflected in the IdealRational Model. The problem with that model is that the best alternative
often cannot be achieved because of practical concerns such as a lack of
time.
 The Stages - of - Problem Solving Model can be contrasted to the IdealRational Model. In the problem solving model, the starting point is the
perception that a problem exists, thus permitting one to consider the
significance of culture, time, and perspective. By contrast, in the rational
model the starting point is the definition of one’s goals. Next, in the
problem-solving model, the person formulates the problem,
 Defines alternatives, gathers information, and tests
proposals. In the rational model, the next steps cited are
defining alternatives and gathering information. In the
problem-solving model, the last steps are planning action,
taking action steps, and evaluating outcomes. Again in
contrast, the rational model is limited to deciding a given
matter with the intention of maximizing goals. The rational
model dose not extend to taking action steps and evaluating
outcomes. Another distinction is that the rational model dose
not have reconsideration as a factor, whereas the problemsolving model does.
 The problem-solving model can help people working in
public budgeting understand the nature of analysis. The
rational model serves as the primary theoretical explanation
of how analysis should conducted, but the rational model
can not be attained.
 The problem-solving model serves as an alternative
theoretical explanation of how analysis should be conducted
in the budgetary process. The model permits cycles of
defining one’s problem, producing alternatives, and testing
alternatives. It implicitly recognizes that any given analysis
will depend upon the ingenuity of the analysts, the kind of
data available to them, the amount of resources at their
command in undertaking the analysis, and other factors. Also
the problem solving model helps the public budget person
relate budgeting, management-by-objectives, progress
reporting, accounting, auditing, and program evaluation.
 Non of the models by themselves is adequate. The
problem-solving and the incremental change models help the
bureaucrat to understand the role of program and budget
analysis in the budget-making process.
 They can be significant, but there are some constraints in
using them. The problem solving model helps the
bureaucrat to understand the context in which intelligence,
knowledge, and analytical techniques must be used.
Together, the models meet the criteria.
 The rational model, the theoretical basis for some budget
reforms, can lead individuals to make false and naive
expectations. That model ignores the political context and
demands the impossible in terms of analysis.. This can
encourage some individuals in the budget process to
neglect timeliness, seek needlessly expensive data, search
for needless alternatives, and quest for clarity in objectives
which will not be forthcoming.