Motivation

The economic models of competitive, monopolistic, and oligopolistic markets are powerful tools. But they are of little use if we cannot apply them in context. This assignment asks you to do just that—apply the economic models to a policy debate, preparing a brief for a decision maker.

But economic theory in the absence of contextualizing data lacks influence. How many people may be impacted by the proposed policy? Are the changes in policy large or small? Is there a pressing need addressed by the policy? How do we know? What are the opportunity costs (ie forgone policy possibilities)? This assignment will expose you to useful data sources for providing context to your arguments.

Learning Goals

This assignment is intended to help you learn:

• to apply economic models to real-world debates
• to present economic analysis in text and figures
• to identify sources of basic data on the country, state, county, and city level
• to judiciously choose data to make the strongest case possible
• to present data in text, table, and chart

Task

This assignment asks you to take on the role of a policy adviser for a public official. Your boss (that’s the public official!) will soon have to cast a vote for or against a specific proposal. They have asked you to prepare a 5-7 page policy brief which gives them background information that they will use to take a position on the policy. Knowing of your fantastic economics training, they have asked you to include an analysis (using the appropriate market model) of the causal effects of adopting the policy as predicted by economic theory.

Assignment Details

• You can analyze any policy proposal you like so long as it is actually being debated at some level of government today

• Your brief must include a data table of your own construction.
• Your brief must include a data graph of your own construction. (Excel makes nice graphs, but you may use other software or draw freehand.)
• Your brief must include a figure demonstrating theoretical predications (eg. graphs) based on an appropriately chosen economic model (perfect competition, monopoly, monopsony, oligopoly)

What You Will Turn In

1) Your policy brief

2) Copies of the data tables from which you drew the data with some indication of what data were used if the source includes multiple variables, years, etc.

Evaluation

You will be evaluated based on the following criteria:

• Analysis of the policy using the appropriate economic model (Was the right model chosen? Was it effectively employed? Was it clearly explained? Was the graphical presentation effective?)
• Quantity of data used to support your analysis (Have you missed opportunities to support your claims and/or argument with numerical evidence? Have you overused data so that the numbers detract from your brief?)
• Quality of the data chosen (How well have you selected your data? Are these powerful pieces of information or are they less useful? Are the data well-connected to the policy under consideration?)
• Quality of the data presentation in text, table, and chart (Is the table/chart clear? Does the table/chart reflect the lazy reader principle? Are sources and definitions appropriately defined and explained? Are limitations of the data appropriately considered?)
• Attention to task and audience.

Tips and Hints

Where can you find data?

While data are published by thousands of sources, some sources are more reliable than others. Listed below are several highly suggested sources. You can find more reputable sources at the Resources for Economists web site rfe.org.

Basic Government Data

• Statistical Abstract of the United States
• Tables at the end of the Economic Report of the President
• IRS web page (www.irs.gov (Links to an external site.)) linked under “tax statistics”

Detailed Government Data

• Bureau of Labor Statistics website bls.gov (or other government departments)
• County and City Data Book (http://www.census.gov/statab/www/ccdb.html (Links to an external site.))

International Sources

• International Financial Statistics published by the IMF
• The World Bank (see the research and data section of their web page worldbank.org)
• United Nations’ Human Development Reports (http://hdr.undp.org/en/)
• UNICEF (see the Info by Country link on their webpage at unicef.org)

Data Aggregator

• FRED (https://fred.stlouisfed.org/ (Links to an external site.) )

What constitutes “data”?

By “data” I mean numerical evidence. The numbers themselves are what I am after—not a source’s opinions about a number, or a narrative describing a number, or any other non-numerical information. So, as I read your paper I should see numbers.

What data are “relevant”?

Having identified your topic, you are ready to seek out data that are relevant to that policy. Many of you will initially hope to find data which “prove” something about the policy. In the sources recommended, you will rarely find any such proof. (Causal arguments are typically found in secondarysources which present an analysis of primary data sources like those we will use.) Rather, you are to seek out numbers which simply inform the debate or provide context for the policy maker’s decision.

For instance, if I must vote on an increase in the minimum wage, what quantitative facts might help contextualize my thinking? What fraction of the US population lives in poverty? How does that compare with other countries? What is the high school drop out rate? How many people currently work at or below the federal or state minimum wage? Are those young people or old? White or minority? Concentrated among those with low education or not? Are there factors which may put low earners in particular risk—like high costs of housing, health care, food, etc? How have these changed over time? Do the changes suggest more or less reason to be concerned about the minimum wage? Having answers to these questions will not tell me whether I should vote for or against an increase. But I suspect I would want to know the answers before I made up my mind just so that I would understand the context in which I was making the decision.

Remember your role

As you write, remember that you are not the decision maker—you are only an aide. It would probably be impertinent to argue that your boss “must” vote one way or the other. Thus, your brief should be positive rather than normative analysis. This isn’t to say it must be perfectly evenhanded. But stray far from the middle at your peril.

Finally, make certain you choose a policy appropriate for the task. Your policy should impact or have an effect on market structure. There is low hanging fruit like giving advice to the DOJ or FTC on a proposed merger or advising the chair of a public utilities commission. There are also more challenging policies such as tax change proposals or bailouts.