Note: The first section of this paper was featured in SEA News Issue #14. For clarity, the abstract and introduction are repeated here.

Many economists are concerned with communicating the results of economic analysis or the implications of economic theory to policy makers. Our effectiveness in doing this varies widely for different individuals and different issues. This paper is an attempt to provide practical advice to enhance this effectiveness. It considers policy "adoption" in the light of literature about the adoption of innovations by farmers and evidence from social psychology about factors that enhance persuasiveness in communication. A small survey of policy makers and policy advisors was conducted. Results provide a number of practical tips and insights.

Economists considering the decisions and choices of policy makers have tended to adopt approaches based on public choice theory, in which voters, politicians, interest groups and bureaucrats are assumed to pursue individual, self-interested preferences (e.g. Schneider and Volkert 1999; Bonetti, 1997). The emphasis in those studies is on explaining policy outcomes, rather than the policy process. While these efforts can be interesting and enlightening, they do not offer much practical help to an economist wishing to influence policy choices. This paper comes from a different though complementary perspective, emphasising engagement with the process of policy formation. It is based on a view of policy makers and policy advisors as individual decision makers, and the process of policy choice as one involving information, uncertainty, persuasion, disagreement, and networks of disparate individuals and groups. Political considerations are included as part of the mix, but are subject to similar uncertainties and disagreements as any other component and are therefore subject to being influenced by effective policy advocates.

There are two elements to the paper. The first comes from the extensive literature on adoption of innovative practices by farmers and other individual decision makers. There is a brief selective review of that literature, highlighting its parallels with the policy choice process, and identifying key findings of relevance to a policy advocate or analyst.

The second element is based on the practical experiences of those involved in the policy process. I present results from a small survey of Australian policy makers and policy advisors and draw on some previously published ideas. I also present some experiences from my recent engagement with the salinity policy process in Australia.

The paper concludes with discussions of common strengths and weaknesses of economists when engaged in the policy process, and of some important responsibilities that economists have in that process. The aim of the paper is to provide practical insights and advice to those attempting to inform and influence policy development. Some of the information is specific to economists, but much of it is more generally relevant to any participant in a policy choice process.

[Continued from part 1]

Strengths and Weaknesses of Economics in the Policy Domain

In the hope that identifying weaknesses is the first step towards their rectification, survey respondents were asked, “In your view, what are the common weaknesses of economists in their attempts to influence policy?” There were two strong themes in the responses. The first relates to the narrowness of the economics paradigm and of the advice its practitioners provide. There were so many responses around this theme that it ought to focus policy economists’ attention firmly onto this issue.

Too isolated from other disciplines. (Gary Stoneham, DNRE Victoria).

Too little appreciation of the broader administrative, legal, political, etc., context within which decisions have to be made. (Ian Wills, Monash University).

A tendency to be too academic rather than pragmatic. They may be seen as not in touch with the real world. (Mark Altus, Department of Treasury and Finance, Western Australia).

Message is too complicated, and often lacking in practicality (Kym Anderson, University of Adelaide)

Too abstracted from real situation, (Ross Kingwell, Department of Agriculture Western Australia).

Too often economic advice is one-dimensional. [Economists] try to promote a “pure” economic thesis and do not readily try to deal with non-quantitative information or intangibles. This usually results in a narrow range of options. (Graeme Robertson, Department of Agriculture Western Australia).

The inability of many economists to understand and well explain the diversity of values and issues which can be taken into account within a micro reform framework. For example, too often we hear that economists are not interested in certain non-monetary values i.e. lifestyle, welfare, equity, environment, ethics, etc. (Scott Davenport, NSW Agriculture).

They take for granted the liberal foundations of at least micro-economics. (John Hyde, former member of Federal Parliament).

Their reform suggestions, if they get to Boards of Management, can be seen as being narrowly defined. (Don McFarlane, Water and Rivers Commission, Western Australia).

A belief that efficiency is a necessary precondition rather than something that can be traded off against other objectives. (Mike Young, CSIRO Land and Water).

They think “economics” is self evident and sufficient in itself. (Roger Payne, Director General, Water and Rivers Commission, Western Australia).

Tendency to under-emphasise non-quantitative information. (Phil Connolly, NSW Treasury).

Being too inflexible. Not being prepared to negotiate. (Trevor Wilson, Department of Primary Industries, Queensland).

Too little attention to private and public transaction costs. (Ian Wills, Monash University).

The second large set of responses related to the quality of economists’ communication. In summary, respondents felt that economists tend to use too much jargon, and to communicate in ways that are too elaborate and technical for non-economists.

They argue for other economists. (John Hyde, former member of Federal Parliament).

Then there was a variety of other comments, most of which reinforced points raised earlier in this paper.

Being dogmatic when caution is justified given the facts and circumstances of the case. Not recognising that the argument is usually about means not ends. (Alistair Watson, Freelance Economist).

Too little time commitment to building relationships, spread too thin across issues to be “expert” or “authoratative” in the policy issue at hand. (Ross Kingwell, Department of Agriculture Western Australia).

Too impatient. (Gary Stoneham, DNRE Victoria).

Respondents were also asked, “What are the strengths of economists (relative to other disciplines) in providing advice or analysis on policy?” All of the responses, without exception, highlighted positive aspects of the economics paradigm and approach to analysing problems. Positives identified included its potential for breadth, its use for integrating diverse technical information, its focus on trade-offs and opportunity costs, its rigour, quantifiability, and robustness.

They provide discipline and rigour that other areas often lack. Economic measures are generally well understood and many disciplines are qualitative. They allow comparisons to be made in a more objective manner. Other discipline areas tend to have threshold or are “drop dead” issues (unacceptable consequences, standards being exceeded, politically unacceptable, etc.) (Don McFarlane, Water and Rivers Commission, Western Australia).

The discipline provides a robust and fairly comprehensive analytical framework for assisting policy makers to make informed decisions. The strength of economics is that it facilitates clear and consistent policy formulation, advice and analysis. It must be noted that economics has its limitations (particularly as regards non-market goods). However, a good economist should clearly recognise and work within these restrictions. (Phil Connolly, NSW Treasury)

Logical application of basic economic concepts: opportunity costs, recognition of decision makers’ incentives to maximise net benefits. (Ian Wills, Monash University).

Economics is in my opinion by far the most rigorous of the social sciences. (I am not saying that the others have nothing to teach us.) (John Hyde, former member of Federal Parliament).

Ability to integrate information from a range of disciplines, some powerful analytical tools, often genuinely interested in policy issues, at ease with “constrained optimisation”. (Ross Kingwell, Department of Agriculture Western Australia).

A sound, consistent, quantifiable theoretical framework (Kym Anderson, University of Adelaide).

The most significant is that they can provide a way of clarifying or measuring the level of agony, use of resources and tradeoffs in a systematic way. (Roger Payne, Director General, Water and Rivers Commission, Western Australia).

Economists have a tremendous advantage in being able to understand the “bigger picture”. And we should not underestimate the advantage of having an understanding of basic economic principles. Having concepts in the back of one’s mind like “public goods”, “externalities” and “market failure” give economists an advantage over others in the policy area. (Trevor Wilson, Department of Primary Industries, Queensland).

Ability to analyse within the context of a rational framework. (Graeme Robertson, Department of Agriculture Western Australia)

Economics is about interdependence and opportunity costs. Economists are stronger on uncertainty than other disciplines. (Alistair Watson, Freelance Economist).

A focus on broader issues and outcomes. (Mark Altus, Department of Treasury and Finance, Western Australia).

General equilibrium/an economy wide focus, not just individual isolated sector. (Neil Byron, Productivity Commission).

Responsibilities of Economists

To conclude, I would like to highlight two areas where economists have particular responsibilities and opportunities. Firstly, economists (like any other professional group) have a responsibility to ensure that the advice they give has a sufficiently robust and broad technical basis. Some of the survey responses indicated that economists do not always form strong enough links with other disciplines for this responsibility to be met. In the case of my experience with salinity, on working closely with hydrologists I found that the usual diagnosis of the issue by economists, as primarily an externality problem, was like a cartoon version of a complex reality (Pannell et al., 2001). In reality, for some dimensions of the salinity problem there are other sources of market failure more serious than externalities (Pannell, 2001a). Consequences of our earlier misdiagnosis persist even now, such as in the creation of unrealistic expectations among some policy makers regarding the role and contribution of market-based economic instruments for salinity management (Pannell, 2001b).

Secondly, economists have a responsibility and an opportunity to contribute to the policy debate in ways that others in the community can not or will not do. The economic paradigm provides us with a unique capacity to do this. Perhaps, for this reason, there is a tradition of providing independent advice in defence of the public interest that seems to be stronger within economics than in most other disciplines. This point was made strongly and repeatedly in the survey responses.

The profession of economics is at its best when it is defending the public interest in the widest possible sense. But there are very few economic advocates of the public interest in the profession. There are many who beaver away, but few who will stick their necks out. (David Bennett, NRMC Pty Ltd, Natural Resource Management Consultants)

I think that there is a need for economists to try to reduce “pork-barrelling” and insert a degree of economic argument into political allocations. In the end society benefits more from Governments making sensible investment decisions, rather than using money to keep the current government in power. But it is an uphill battle. (David Bennett, NRMC Pty Ltd, Natural Resource Management Consultants)

A strength of economists is our tendency to focus on public interest outcomes. (Gary Stoneham, DNRE Victoria).

Economists are less likely to be captured by special interest groups. (Ross Kingwell, Department of Agriculture Western Australia).

Politics is overly dominated by self-interested groups. By focussing on efficiency, we can contribute to better social outcomes. (anonymous by request).

Professional economists should not be in the popularity business. (Alistair Watson, Freelance Economist).

Born with talent, having acquired specialist knowledge at public cost and probably enjoying very satisfactory lifestyles at public cost, economists are not justified in ignoring public policy issues while they count the angels on pinheads. Of course, it would be extremely inefficient for individuals to devote large licks of effort to things they are not good at, but being privileged members of an open democratic society they should try to contribute to it. (John Hyde, former member of Federal Parliament).

It should be acknowledged that satisfying these exhortations to action will involve significant costs, including time, energy, stress, frustration, risk of conflict, and absence from home. A crucial factor in my own attempts to engage in the policy debate was my change in employment away from being an academic with responsibilities for teaching, administration, supervision and research, into a predominantly research and extension oriented position funded by an external agency (the Grains Research and Development Corporation). It would have been vastly more difficult to maintain an effective involvement in current policy debates while meeting the diversity of university responsibilities faced by most academics.

Acknowledgements

I am grateful to each of the survey respondents, particularly to Phil Connolly (NSW Treasury) who made me aware of Owen Harries’ article, and Neil Byron (Productivity Commission) for sharing his unpublished conference presentation with me. Thanks also to Deborah Peterson for comments on a draft, and to Bill Malcolm for the conference invitation that led to the preparation of this paper.

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