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The bottom line

The bottom line is: good politics is good economics. The two cannot be divorced. In order to be an effective public servant, one must have a firm understanding of the costs and benefits of a policy, and how to argue for its passage and implementation when budget constraints are as real as ever. Professor Alicia Sasser Modestino’s “Economic Analysis for Law, Policy, and Planning,” taught us just that.

Throughout the semester, we explored the phenomenon of tradeoffs and the balancing act between efficiency and equity. We examined a variety of economic concepts from marginal costs to market failures. We delved into the works of two fundamental economists—the conservative Milton Friedman and the liberal John Kenneth Galbraith—to understand the diverging frameworks by which they explain markets and government. And while we recognized that neither are perfect or entirely objective, they each serve as an imperative basis for analysis. We established a baseline understanding of core economics but also identified imperfections in the models. We refined our ability to look at public policy with a more critical eye and are now more prepared to answer: will this policy be efficient? Will it be equitable? How might externalities come into play? Given the costs and benefits, what might be a better option? Are the circumstances Pareto optimal—is this the best we can serve one group without harming another?

While there are other forces—like stifling partisanship—that influence public policy decisions, cost-benefit analysis is a key tool that helps policymakers make more data- and evidence-driven decisions about crafting and implementing policies. Since these decisions are largely based on budget restraints as well as their perceived efficiency and impact, understanding the economics is crucial. In many ways, economics breaks down political barriers. Our natural instinct is often to advocate for a policy based on our morals and convictions, but that only goes so far. Economics, grounded in theory and practice, allow for a “normative” response: “what will happen” versus “what should happen.” It brings the facts and realities back into the picture and opens dialogue at a time we need it the most—when a moral debate is either a vicious cycle or a stopgap to progress.

Economic Analysis for Law, Policy, and Planning” equipped us to advocate with facts. During each class, we were tasked with debating a public policy topic using the tools of economic analysis to make our case. We debated gun control using the concept of welfare economics; healthcare using the concept of cost-benefit analysis; and the Fight for $15 using the concept of opportunity costs. Our semester-long research project gave us the chance to delve deeply into a topic of our choosing, using a purely economic justification to assess the policy’s efficiency. We applied a variety of economic concepts in our first research paper, assessed two alternative policy options in our second policy brief, and ultimately were able to make a recommendation in our final op-ed piece. It was evident during each of our presentations that this process pushed us to advocate beyond our convictions, and to really understand the technicalities and implications of a policy.

Having worked as a senior economist at the Federal Reserve Bank of Boston, professor Modestino brought a wealth of knowledge to the classroom. Her lectures were fueled by her acumen and her ability to bring relevancy to what often feels like a daunting topic. She made economics more human, just as the Nobel Prize Winner in Economics, Richard Thaler, has done. This approach of infusing economics with the irrationality and nuances of our behaviors and of the world should be commended. And we must continue to appreciate economics as an essential tool to inform policy decisions. In the wake of millions of dollars in tax cuts and a reining in of spending, it is more important than ever that we employ these concepts to advocate for public policy and for social justice. While passion may without a doubt drive advocacy, the budget is often where the story ends. And after all, there’s no such thing as a free lunch.

Published On: December 13, 2017 |
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