Public Policy Investment Book

I am pleased to announce that my new book with Peter John has been released.  Public Policy Investment addresses one of the enduring
 questions of democratic government: why
 do governments attend to some public policies 
but not others? Political executives focus on a range of policy issues, such as the economy, social policy, and foreign policy, but adjust their priorities over time. Despite an extensive literature, it has proven surprisingly hard to explain policy prioritization. This book offers a new theoretical mechanism underlying observed public policy priorities, public policy investment, by which governments enhance their chances of getting reelected by managing a portfolio of public policies. Governments invest for the public, making choices about risk to yield electorally recognized returns. The public provides signals about their policy priorities that can be measured by expressed opinion in polls, and the clarity of these signals is important for a government’s public policy investment decisions.  Priority-setting is thus a form of conditional representation that evaluates information about public priorities in the light of objective indicators about the state of the world that impact many policy domains in different ways; recognizes the clarity and volatility of the policy priorities of the electorate; and incorporates non-policy factors like the leadership traits of political executives and the partisanship of voters.  The quality of conditional representation is captured the performance of a government’s public policy portfolio, which has an important impact on election outcomes. The book develops a quantitative strategy for capturing the performance of public policy portfolios, showing evidence in the case of Britain between 1971
and 2000 that governments with better performing portfolios are favored at the ballot box.  Case studies of general elections illustrate the role of public policy investment in the statecraft practiced by prime ministers from Edward Heath to Margaret Thatcher to Tony Blair. The book also challenges comparative scholars to consider public policy investment and conditional representation in a variety of political systems that incorporate the separation
of powers, multiparty government,
and decentralization.

Ian Budge, Bryan Jones, and Liz Gerber provided the following endorsements, for which Peter and I are very grateful.

‘This ambitious book takes a new look at party policy prioritization in government, drawing on financial theory to systematize the way decision-makers think about their political agenda. Using the language and formalizations of asset management and investment, the book gives new rigour to ideas about parties emphasising the issues they will benefit from in terms of elections and votes, which it tests out against British politics 1970-2000, using measures and interpretations suggested by the theory.
The book is not just an impressive intellectual achievement but a fresh and invigorating way of viewing politics within the rational choice tradition. This makes it of interest to political scientists and economists alike, not to mention the political practitioners whose strategies form its subject matter. A must-buy for anyone really interested in the development of political science and the forces driving contemporary British politics.’

Ian Budge, Research Professor in Government, University of Essex.

In Public Policy Investment, Tony Bertelli and Peter John have produced a major innovation in the study of policy processes that will change how we think about the linkages between public opinion and public policy. Most importantly, they view the set of policy issues currently being addressed by government as a portfolio, akin to an investment portfolio, and see public attention to those issues as signals about the relative values of priorities that government should pursue. Government must decide whether to address the issue or not; any issue addressed comes at the expense of the other issues in the portfolio. This is in stark contrast to current treatments of the linkage between policy and opinion, which take each issue separately, hence missing the inevitable trade-offs. Using data collected through the British Policy Agendas Project, they go on to study changes in the composition of the government of Britain’s policy portfolio, and address the issue of how investing in attention can pay dividends to the re-election potential of government.

Bryan D. Jones, J.J. “Jake” Pickle Regent’s Chair in Congressional Studies, Department of Government, University of Texas

Bertelli and John offer a fresh and compelling lens through which to understand one of the most consequential challenges facing governments, namely deciding which issues will be given priority on the policy agenda. Building on insights from financial economics, their theory of public policy investment posits that government leaders “invest” attention in public policies based on their assessments of the risks and returns of alternative policy portfolios. The book grounds its empirical component in modern British politics, but the concepts and insights transcend the immediate empirical setting and are broadly applicable to a wide range of policy-making environments. By focusing attention on the importance of executive leadership and the difficult business of statecraft, this book is a must-read for anyone interested in government decision-making and the public policy process.
Elisabeth R. Gerber, Jack L. Walker, Jr. Professor of Public Policy, University of Michigan

New Research – Policy Agendas in British Politics

A new book entitled Policy Agendas in British Politics will be available from Palgrave-Macmillan this Summer.  It is a product of an inspiring collaboration with Peter John (University College London), Will Jennings (University of Southampton) and Shaun Bevan (University of Mannheim). Using a unique dataset covering half a century of policymaking in Britain, this book traces how topics like the economy, international affairs, and crime have changed in their importance to government. The data concern key venues of decisionmaking – the Queen’s Speech, laws and budgets – as well as the media and public opinion. These trends are conveyed through accessible figures backed up by a series of examples of important policies. As a result, the book sheds new light on the key points of change in British politics, such as Thatcherism and New Labour, and explores different approaches to agenda setting helping to account for these changes: incrementalism, the issue attention cycle and the punctuated equilibrium model.  What results is the development of a new approach to agenda setting labeled focused adaptation whereby policymakers respond to structural shifts in the underlying pattern of attention. 

We were most grateful to the following scholars for their endorsements:

“Policy Agendas in British Politics presents a novel overview of British politics and policy-making across the past two generations. The result is a new understanding of the dynamics of British politics, one that tests rather than assumes the impact of such things as changes in Prime Ministerial leadership, external shocks, or institutional design. The impressive empirical work, combined with careful theorizing and attention to previous works of many types will guarantee a wide and well deserved audience in Britain and beyond.”— Frank Baumgartner, University of North Carolina

“A new and innovative lens through which to analyse and understand policy prioritisation in the UK since 1945: new in its heuristic – of ‘focused adaptation,’ new in its dataset, new in its use of change point analysis, and new in its challenges to existing academic orthodoxies about pol- icy stability and change. New is good.” — David Judge, University of Strathclyde

“This book is a very innovative and carefully executed piece of scholarship: a careful analysis of the Queen’s Speech as a means of exploring policy agendas has not been undertaken before. The model of focused adaptation provides an interesting and potentially very useful addition to existing theoretical frameworks. It represents a valuable addition to the public policy literature.” — Wyn Grant, University of Warwick

We hope you will find it of interest!



Public Policy Investment

I am very pleased to announce that a paper long in progress with Peter John (University College London) has been accepted for publication in the British Journal of Political Science.  An earlier version of the paper was mentioned in this post, but the forthcoming paper can be found here and an abstract as follows:

We set out a theory of political capital investment to explain how democratic governments emphasize specific public policies. Our claim is that governments seek to enhance their chances of re-election by managing their portfolio of public policies in a calculated manner. In this way, government is like an investor making choices about risk to yield return on its investments of political capital. We introduce a quantitative method for assessing risk and return in government policy portfolios. An active investment strategy emerges as an element of statecraft; stability in returns is crucial and governments assume significant risk to maintain it. Do the public reward returns to political capital? Do they punish risky policy investments? How do the returns to policy investmentguide political management and statecraft? We address these questions through time-series analyses of risk and return in the case of Britain between 1971-2000. Our findings reveal that risk and return predict election outcomes and that returns, risk profiles and the uncertainty in public signals influence the prioritisation of policies.  

The paper is part of a larger project that includes a book with Oxford University Press that we expect to complete early this fall and comparative work with  Laura Chaqués and Anna Palau of the Spanish Policy Agendas Project team and others who we will be meeting at the Comparative Policy Agendas conference next week in Reims.  Peter and I will be presenting some results from the project at the upcoming European Political Science Association meetings in Berlin this month.  I will provide more information about the project in future posts that I hope will be of interest.

The Political Economy of Public Sector Governance

I am delighted to announce that the book I mentioned in this post is now published and available from Cambridge University Press.  Designed for students and empirical researchers, the book is meant to be a general, nontechnical introduction to core ideas in positive political theory as they apply to topics in public management and policy.

I am grateful for the endorsement of my former colleague Hal Rainey, who wrote:

“Bertelli provides a valuable resource for those who seek an improved understanding of the major ideas in the literature on the political economy of governance. He explains and applies the major concepts and theories, such as the principal-agent model, screening, signaling, and others, with effective examples. An important addition to graduate and upper-level undergraduate courses on governmental management and administration, public policy, and related topics, and for all scholars seeking a better grasp of this literature and its contributions.”

Likewise, I am indebted to Chuck Shipan for these very kind comments:

“The study of public management has undergone a revolution over the past two decades, with new approaches providing fresh insights into long-standing issues. As someone who is both firmly steeped in the traditional concerns and issues and also a major contributor to the new approaches, Tony Bertelli is the perfect person to serve as a tour guide to this revolution. The Political Economy of Public Sector Governance is lucid, engaging, and chock full of ideas for scholars and practitioners alike.”

I hope readers find the book useful and look forward to their comments.

Cabinet-Congress-President Ideal Point Data Available

I am pleased to announce that Christian Grose and I have released a datafile including the ideology estimates for U.S. presidents, legislators and cabinet secretaries used in Anthony M. Bertelli and Christian R. Grose. 2011. “The Lengthened Shadow of Another Institution? Ideal Point Estimates for the Executive Branch and Congress.” American Journal of Political Science 55(4): 767-81.  The dataset is available by following this link.

Strategic Capacity Building

I’ve been occupied over the past few weeks with finishing a textbook, The Political Economy of Public Sector Governance, for Cambridge University Press.  I’ve been told it will be in print next summer.  The book seeks to bring core ideas from the theoretical literature of — for want of a better term — the political economy of bureaucracy literature into MPA and MPP classrooms, and also to introduce them to applied public management researchers from a variety of backgrounds who would like to learn more.  In this sense, it is a hybrid book and wound up being one of my most difficult projects. The experience led me to think very carefully about my own teaching style and to add nuance to the many reasons why I respect authors of good textbooks.  Because it also forced me to make hard choices about which studies to discuss in a limited space, it was a very helpful reflection on a body of theory that I have thought about as an applied researcher for many years.

My primary focus in such reflection was about how this literature might be useful to applied scholars and practitioners of public management.  For instance, chapter 5 concerns government contracting with the private and nonprofit sectors.  An interesting extension of the insights of two recent delegation papers regards the acquisition of expertise by contractors. The essential idea is that an administrative agency or contractor makes choices about acquiring expertise that can have incentivize a particular shape for the policy agenda.  A recent paper by Michael Ting relies on the difference between specialist agencies, who can target their capacity-building investments to a particular task, and generalist agencies that cannot. The essential insight is that specialist agencies can create incentives for the government to undertake some tasks rather than others because they have developed the capacity to provide good outcomes precisely by doing things they prefer to do. In the book, I call this process strategic capacity building. Government may consequently take on things that it might not have but for the capacity choices of contractors.   Strategic capacity building also implies that the advocacy mission of non-profit organizations and the contracting environment work together to great effect, which is something that practitioners and scholars know well.  Paul Light, for instance, has argued that organizations that engage in capacity building can enhance organizational effectiveness, which in turn inspires donors and funders to provide additional support.

A very clever and insightful paper by Steven Callander unmasks another aspect for strategic capacity building. When tasks are complex, knowledge about how to do them is difficult for others to sequester.  His argument implies that we should expect capacity acquired by contractors over time to be in regard to complex, non-invertible tasks. Such capacity cannot be easily appropriated, particularly by political principals in furtherance of their policy agendas.  Strategic capacity building can, thus, produce two interesting outcomes. First, the government does not face a true market for services when making contracting decisions. This is because the services offered by potential contractors are defined, at least in part, by their strategic capacity building choices. Second, non-invertible capacity for complex tasks permits contractors to shape policies as they desire unless those outcomes are very far from those envisioned by government, or in other words, because there is substantial policy conflict between the government and contractor.

When non-profits and private firms become involved in the contracting state, they travel (with apologies to George Krause) a two-way street of policymaking with administrative agencies and politicians.

Risk and Return in British Politics

This week, my frequent collaborator Peter John will be presenting the first paper in a larger project on the prioritization of public policies by governments at the European Political Science Association meeting in Dublin. We argue that governments seek to enhance their chances of re-election by managing their risks from attending to particular policy problems. In this way, government is like an investor making choices about risk to yield returns on its investments of political capital. We claim that the public provides signals about expected political capital returns for government policies, or policy assets, that can be captured through expressed opinion in polls.[1] While always approximate, these price signals are at times noisier than others meaning that uncertainty in the environment in which governments must choose policies correspondingly differs. The amount of attention that a government gives to a policy domain, or what we call its investment level in a policy asset, generates return to political capital but also risk due to the variance of each asset and the covariance among them. The nub of our theory is that strategies of statecraft consider risk and return in their policy portfolios and uncertainty in the public’s policy valuation. We think this is a novel way for examining policymaking and leadership in government.

Drawing from a wealth of data in the UK Policy Agendas Project with which we are involved and a host of other sources, we test our claims in the UK between 1971-2000.  The graph below shows return to each of five policy asset classes throughout the period as well as price signal uncertainty from the public.
Note the stable and low returns associated with environmental policy compared with the high but volatile returns from economic policy.  The public’s price signal for the former is rarely uncertain while for the latter it is far noisy.
We hypothesize that the resulting risk in the portfolio and returns to political capital investment impacts election results.  One important finding in the project thus far is that both risk and return predict election outcomes: when the government reduces risk and achieves a higher return, it gets a better electoral outcome. An interesting twist, consistent with claims about voter learning in the representation literature, is that the electorate in retrospect rewards governments for taking on risk.  When the public is uncertain about its policy priorities and price signals are noisy, the government gets a delayed reward for prescience in its policy emphasis.
In addition to the paper that Peter will present in Dublin on Thursday, we are writing a book-length manuscript over the summer.

[1] There is, of course, no political market where voters go continuously to the polls with high turnout and assess individual policies. This is arguably the central difference between the study of politics and of economics. However, we claim that citizens can express opinion that we measure through frequent polls. Governments endeavor to learn such information and take it as a price signal for its policy assets. With that information, sometimes noisier than others, government makes investment choices.