POLICY

FORECASTING AND
FORMULATION
GIANN LORRENZE F. RAGAT
Reporter - MPA Student

MS. PRESY ANTONIO, MMPM, CSEE

Professor
 PROBLEMS OF FORECASTING

In-accuracy of info / data

• The extent of accuracy of info / data limits accuracy of forecasting
policy future.
• For example, the Treasury may underestimate the federal budget
deficit based on extrapolation of trends using single variable or
models incorporating hundreds of variables.
PROBLEMS OF FORECASTING
Limitation of forecasting methods and techniques
Quantitative method
• Highly dependent on data and model to predict future. Forecasting
models are develop base on assumption. Assumption may not be
true, data may not sufficiently available

Qualitative method
• Highly dependent on personal opinion to predict future. Experts
and genius is not easily available, and if they are available within
the policy making institutions, their numbers may not be enough
PROBLEMS OF FORECASTING

Invalid experts opinion

• if the opinion of one person is incorrect, the forecast is incorrect.

• the most recent situation / can overly influence individuals, who
then create overly pessimistic or optimistic forecasts
PROBLEMS OF FORECASTING

Personal bias

it's difficult to eliminate the forecaster’s personal bias from the data that underlies
the forecast.

Example,
Panel, who tend to be optimists, will likely develop a forecast that is overly
optimistic
PROBLEMS OF FORECASTING

In-accuracy of forecast
• all qualitative forecasts assume that certain characteristics that
existed in the past will exist in the future.
• Unfortunately, sometime unexpected occurrences happen,
such as changes in weather, social and economic factors
• Each of these occurrences can affect decision and the
accuracy of a forecast.
• For this reason, the longer the forecasting period, the less
accurate the forecast will be
 END OF FORECASTING

• Once forecasting is done, administrator will starts formulating

/ drafting the relevant policy options / courses of action to
resolve problem
POLICY FORMULATION

Meaning:
• Process of formulating (drafting) / developing acceptable courses of
action / options for the selected policy agenda

• It involve 2 main elements / activities:

POLICY FORMULATION

Analysis + Authoriation = Policy

Formulation
• Valid • Acceptable
• Implementable • Drafting course
• Efficient of action

Administrators Politicians Administrators

Policy maker
ANALYSIS:
WHICH POLICY OPTION TO CHOOSE?
• In deciding which courses of action / policy option to
choose for a selected policy agenda, policy maker
(administrators) will be doing 2 main tasks:
i. Analyzing the courses of action
ii. Deciding which type / category of policy option to introduce
I. ANALYZING THE COURSES OF
ACTION

In analyzing the courses of action, administrator would

want to know whether or not and to what extend the
options are:
• Valid to solve problem
• Implementable
• Efficient (financial cost)
 ANALYSIS TECHNIQUES:

Cost benefit analysis:

• Consider the direct & indirect benefit of addressing the problem(valid)
• Consider the direct & indirect benefit should new policy is introduced or
existing policy is modified (valid & implementable)
• Consider direct & indirect cost (financial and non-financial) for the
actions to be taken (implementable & efficient) in addressing the
problem
• Discount future net benefits – to reduce future direct & indirect benefit
and cost to the present value
• Compare direct & indirect and present and future cost and benefits of
policy alternative
 II. DECIDING WHICH TYPE / CATEGORY OF POLICY OPTION
TO INTRODUCE

• one or combinations of the following types

of policy options will be determine:
 TYPES / CATEGORY OF POLICY OPTIONS

Inducement: either positive such as tax credit holiday or negative in

nature such as fines and charges impose for pollution.

Regulatory: to control and regulate behavior of people such as regulation

governing pollution.

Enforcement: involves giving (enforcing) certain people rights or duties

they deserve. For example, human rights legislation.

Allocation of power: where certain body is charged with power to

improve certain situation, e.g. Parliamentary legislations, executive orders,
judicial decisions etc.
 ANALYSIS IS DONE

• Once analysis is done, administrator will proceed to drafting

the policy (legislation / administrative rules for the courses of
action chosen)
 AUTHORIZATION:
WHICH COURSES OF ACTION TO ACCEPT?

• At this stage, assuming the course of action is able to resolve

problem and is cost effective, now the political actor / policy
maker will be deciding on which policy recommendation / causes
of action proposed to be accepted / authorized.
• This is done through political process (first reading)
 QUESTIONS TO ADDRESS AT
AUTHORIZATION STAGE

• To what extend the chosen course of action able to get political support
• To what extend the chosen course of action able to get administrative
support
• To what extend the chosen course of action able to get public support
POLICY ACTORS

• Who are the actors?

• Actors in the policy process may be either individuals or
groups
• Policy actors are called policy subsystems as they constitute
a forum where they discuss policy issues, persuade and
bargain in pursuit of their interest.
POLICY ACTORS-POLICY
SUBSYSTEMS

Policy Actors
Organization of the Policy Subsystems Organization
international system Of the society

Organization of the state

• During the course of interaction actors often give up or modify
their objectives in return for concessions from other members
of the subsystem

• Institutions shape the behaviour of actors by conditioning the

perceptions of their interests and affecting the probability of
realizing them by constraining some choices and facilitating
others.

• Nature of actors varies by country, policy sectors or domain or

over time.
CLASSIFICATION OF ACTORS

• Three major categories:

1. State actors: Elected Officials

Appointed Officials
2. Societal actors: Interest groups
Research Organizations
Media
(Voters, Political parties)
3. International Actors: Organizations
Donor Community
 1. STATE ACTORS

1. Elected officials (2 categories):

i) Members of the Executive/Cabinet (major
role)
ii) Members of the Legislature (minor role)
i) Members of the Executive: The source of power:
Ultimate authority to make and implement the • Constitution/Law
• Control over information
policy
• Control over fiscal resources
• Access to mass media
• Control over bureaucracy (to provide
advice and to carry out its preference)
ii) Members of the Legislature

-- Not a significant actor

--Policy functions are mainly performed in Sources of Power:
-- Law
the Committees not on the floor of the
-- Access to material resources
legislature -- Repository of a wide range of
skills and expertise
--In a parliamentary democracy, scope of -- Access to a vast information
influence is minimal. -- Long tenure
-- Close interaction with organized
• ii) Appointed Officials (Bureaucracy): groups
• The ‘key’ and ‘central figures’ of policy
subsystem
WHO IS MORE POWERFUL?
BUREAUCRATS/POLITICIANS?

Four approaches:
1.Policy/Administration Model:
--Politicians decide on the policy and bureaucrats implement
-- An unrealistic model

Why abandoned?
-- Due to a lack of expertise of the politicians
to develop effective policies without the help of bureaucrats
2. Facts/Interest Model:
-- Emphasizes bureaucrat’s monopoly over information
-- Administrators bring facts, figures and knowledge to policy
making and emphasizes technical efficacy
--Politicians add political sensitivity and responsiveness through
articulating
mediating &
balancing diverse interests
3. Energy/Equilibrium Model
• Politicians are the energizers (deals with unorganized individuals)
-- They give policy directions inspired by the principles/interests of
the masses
• Bureaucrats maintain equilibrium (deals with organized groups)
-- They give policy meaning and sense by providing understanding of
technical aspects through negotiation with affected parties.
4. Pure Hybrid (Opposite to the first approach)
-- Harmonious blending between the two actors
-- A utopian model
-- This is a major concern of policy making as bureaucrats
often play the role of politicians
WHO MAKES POLICY?
BUREAUCRATS/POLITICIANS?
• It’s a key concern of policy making

• Policy making is not the sole responsibility of the politicians

as complexity increases, bureaucrats have to be involved in
policy making.

• Both contribute to policy making but bring to it differing

values and attitudes
• Bureaucrats Politicians
Technical/Factual Ideological/Idealistic

• Politicians set goals and bureaucrats decides the way of achieving them

• Bureaucrats Politicians
• Means/ Practical Ends/value laden
TYPE OF POLICY—
DETERMINANT OF THEIR ROLE
1.Distributive Policy

-- Less controversial

-- Bureaucracy is dominant

2. Regulatory Policy

-- Conflict of individuals and groups originates the policy

--Bureaucrats play the mediators role

- Role of Bureaucrats is more direct.

3. Redistributive Policy (most controversial)

-- often open to debate and political by nature

-- Politicians are more involved

-- Politicians are made responsible for the policies.

 2. SOCIETAL ACTORS

Groups are the basic units of political system and

political actions are the resultant of group Sources of Power:
interaction. a. Knowledge/expertise/information
They know the most about their area of
• Groups are rarely ignored
concern.
i. Interest Groups: Policy making is an information
intensive process.
• Individuals of a society turn into interest group as
a result of the possession of common social
characteristics.
ii. Pressure Groups:
• Interest groups turn into pressure group when
they want to obtain favourable decision.
b. Number:
In terms of size of membership interest groups differ greatly
c. Financial:
Groups often make financial contribution to the political parties they favour.
d. Political:
Sometimes they campaign for the candidates who they think would support their
cause in the government (USA)
• Nature of pressure:
• Groups usually represent other members through communicating their interests
to the public authorities.
• Two ways of pressure:
• Groups may create pressure on govt
• Government may consult groups
iv. Research Organizations:
• Organizations engaged in multi-disciplinary research intend to influence
public policies

v. Mass Media:
• Crucial link between the state and society
• Media influences the preferences of govt and the society on public problems
and solutions
• Media combines the passive roles of reporters with active analysts and
advocate of solutions.
• Media shapes up the preferences of public and understanding of a public
problem.
3. INTERNATIONAL ACTORS

• Institutions/Bodies/countries (GATT, WTO, TNCs)

• International actors influence policies through conventions, treaties
• Nearly impossible for states to stop foreign influence
• Sovereignty of state depends:
---severity of international pressure
---nature of issue in question
---features innate to the state(economic, military and domestic
strengths)