Atlas115M Analytic Methods

Synthetic course outline

This six-week module is designed to improve the analytical skills of policy professionals who must make decisions based on mostly quantitative (and some qualitative) data in environments characterized by significant uncertainty and risks. The concepts, skills, and analytical tools students learn in the course rest upon a foundation of economic principles, institutional analysis and, to a lesser extent, political and social psychology. The aim of this course is to enable students to identify patterns of behavior and outcomes, to think about those patterns and outcomes, and to learn analytical frameworks methods that facilitate understanding and prediction.

Learning outcomes

On successful completion of this course students will have the skills and knowledge to be able to analyze public management problems by appropriately utilizing the theories and principles in the normed topics and concepts noted below.

Normed topics

The topics are normed in having a volume of content capable of being taught in one course-week of instruction – nominally 3 hours of in-class work and 7 hours of outside-class reading.

  1. Decision Analysis
  2. Agency Theory
  3. Cost-Benefit Analysis
  4. Project Management
  5. Risk Management
  6. Impact of Bias on Decision-Making and Insights from Behavioural Economics

Like other normed topics on the Atlas, each of these has a topic description, links to core concepts relevant to the topic, learning outcomes, a reading list drawn from available course syllabi, and a series of assessment questions.

Concepts to be learned

Decision ChainDecision Point; Agency TheoryThompson’s Three Models of Public Sector Accountability; Cost-benefit AnalysisCost-effectiveness Analysis; Capital ProjectProject/Program ObjectiveKnowledge Project;  RiskResidual RiskRisk AppetiteRisk ToleranceCatastrophic HarmsRisk IdentificationRisk ManagementRisk MitigationRisk ProfileRisk Strategy;  Negativity Bias; Anchoring Effect; Confirmation Bias; Groupthink. Confirmation Bias

Course syllabi sources

University of Toronto: PPG-1001 & PPG-1007; Carleton PADM-5814 & PADM-5272; Harvard Kennedy School: API-201 & API-139M & MLD-110B; University of Chicago: PPHA-31920; University of Singapore: PP-6703; University of Illinois-Chicago: PA-526; University of Saskatchewan-Regina: JSGS-828; Rutgers (Bloustein): 34:833:543 & 34:833:632

Recommended readings

Week 1:  Decision Analysis

Clemen, Robert T. and Terence Reilly. 2001, Making Hard Decisions with Decision Tools, Duxbury Press: Pacific Grove, CA. Chapters 1-4 (Chapter 6 on creative decision making optional)

Gonick, Larry; and Smith, Woollcott. 1994. The Cartoon Guide to Statistics. (A nice lay-person’s guide to decision analysis by three prominent leaders in the field.)

Hammond, John S.; Keeney, Ralph L.; and Raiffa, Howard. Smart Choices: A Practical Guide to Making Better Life Decisions. Chapters 6-8 and 10

Week 2: Agency Theory

Bendor, Glazer and Hammond (2001) “Theories of Delegation”, Annual Review of Political Science 4:235–269

Gibbons, R. “Lecture Note 1: Agency Theory.” http://web.mit.edu/rgibbons/www/LN_1_Agency_Theory.pdf

Holmstrom and Milgrom (1991). “Multitask Principal Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design”, Journal of Law, Economics, and Organization 7: 24-52.

Eisenhardt, M, K. (1989). “Agency theory: An assessment and review.” Academy of Management, The Academy of Management Review, 14(1), pp. 57.

Ferris, J. A. (1992). School-based decision making: A principal-agent perspective. Educational Evaluation and Policy Analysis, 14(4), 333-346.

Week 3: Cost-Benefit Analysis

De Rus, Ginés. Introduction to Cost–Benefit Analysis. Edward Elgar, 2010. Chapters 1, 2 (2.1-2.3), 3(3.1-3.2)

Arrow, Kenneth, et al. 1996. “Benefit-Cost Analysis in Environmental, Health, and Safety Regulation: A Statement of Principles” AEI-Brookings Joint Center.

Boardman, A.E., D.H. Greenberg, A.R. Vining, and D.L. Weimer. 2011. Cost-Benefit Analysis: Concepts and Practice (Fourth Edition). Upper Saddle River, N.J.: Pearson. Chapters 2-5.

Week 4: Project Management

Brinkerhoff, Derick W., ‘Looking out, looking in, looking ahead: guidelines for managing development programs,’ International Review of Administrative Sciences, Vol. 58, 1992, pp. 483- 503.

Pellegrinelli, Sergio, ‘What’s in a name: Project or programme?’ International Journal of Project Management, No. 29, 2011, pp. 232-240.

White, Louise G., Creating Opportunities for Change: Approaches to Managing Development Programs, Lynne Rienner Publishers, 1987, Chapter 1.

Wysocki, R. K. 2009. Effective Project Management: Traditional, Agile, Extreme (5th ed.). Indianapolis: Wiley. Chapters 1-9 and 11.

Week 5: Risk Management

Eggers, William and John O’Leary. If We Can Put a Man on the Moon: Getting Big Things Done in Government. (Harvard Business Press, Boston, 2009) Chapter 4, The Overconfidence Trap, 107-134.

Hopkin, Paul. Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management. Second Edition. Institute of Risk Management, 2012. Chapters 1-6

Sparrow, Malcolm. The Character of Harms. (Cambridge University Press, 2008) Introduction, 1-18 and Chapter 6, 101-107.

Week 6: Impact of Bias on Decision-Making and Insights from Behavioural Economics

Forester, John. “Bounded Rationality and the Politics of Muddling Through.” Public Administration Review 44, 1 (January 1984), 23-31.

Henrich, John, et al. 2001. “In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies.” The American Economic Review 91, 2: 73-78.

Gladwell, Malcolm. 2005. Chapter 3, “The Warren Harding Error: Why We Fall for Tall, Dark, and Handsome,” in Blink: The Power of Thinking Without Thinking. Pages 72-98.

Jones, Bryan D. “Bounded Rationality.” Annual Review of Political Science 2 (1999), 297-321.

March, James G. and Johan P. Olsen. 1996. “Institutional Perspectives on Political Institutions.” Governance 9, 3: 247-264.

Wilson, Rick. 2011. “The Contribution of Behavioral Economics to Political Science.” Annual Review of Political Science 14: 201-223.

Renwick Monroe, Kristen and Kristen Hill Maher. 1995. “Psychology and Rational Actor Theory.” Political Psychology 16, 1: 1-21.

Tversky, Amos, and Daniel Kahneman. 1974. “Judgment under uncertainty: Heuristics and biases.” science 185.4157: 1124-1131.

Tversky, Amos and Daniel Kahneman. 1981. “The Framing of Decisions and the Psychology of Choice.” Science 211, 4481 : 453-458.

Sample assessment questions

1a) Define the following terms: Decision ChainDecision Point. 1b) We often have to make decisions under uncertainty. In a short one-page paper, describe one technique for approaching a decision about which you have imperfect information (use an example, real or hypothetical). 1c) What is a formal decision model? How can these be helpful in public policy development?

2a) Define the following terms: Agency TheoryThompson’s Three Models of Public Sector Accountability. 2b) What is a principal-agent problem? Why is this an important concept for public sector managers to understand? 2c) Explain how the principal-agent problem can arise in the specific instance of collaboration between unelected public servants and the elected official who they serve.

3a) Define the following terms: Cost-benefit AnalysisCost-effectiveness Analysis. 3b) “Cost-benefit analysis for decisions is somewhat different in the public sector than the private sector because while private sector firms’ objective is to make money and maximize profit, public sector organizations have a much more diverse and sometimes difficult to measure set of objectives.” Please write a 2 page paper either agreeing or disagreeing with this statement, using real world examples. 3c) What are unintended consequences? How can policymakers aim to include the potential for unintended consequences in their cost-benefit analyses given that they are often very difficult to predict and estimate the importance of?

4a) Define the following terms: Capital ProjectProject/Program ObjectiveKnowledge Project. 4b) What is a project life cycle? Describe the main phases of a project life cycle. 4c) What are the differences between agile and traditional project management?

5a) Define the following terms: RiskResidual RiskRisk AppetiteRisk ToleranceCatastrophic HarmsRisk IdentificationRisk ManagementRisk MitigationRisk ProfileRisk Strategy. 5b) What is risk management? Why is it an important topic for public policy students to study? 5c) “In making policy decisions, governments should always aim to minimize risk.” Discuss this statement in a 1-page response. You may agree, disagree, or simply provide a response to the statement that is neither an endorsement nor a rejection.

6a) Define the following terms: Negativity Bias; Anchoring Effect; Confirmation Bias; Groupthink. 6b) What is confirmation bias? Why is this concept important for people working in public management to understand? 6c) “People systematically behave in irrational, self-harming ways because of cognitive bias, and government should therefore intervene to protect people from their own biased and flawed decision making.” Discuss this statement in a short 2-3 page response. You may, but need not, offer an endorsement or rejection of the statement. Please support your argument with real-world evidence.

Page created by: James Ban and edited for the new Atlas by Ian Clark on 9 December 2015.