Professor Luis Garicano

This course is available on the Double Master of Public Administration (LSE-Columbia), Double Master of Public Administration (LSE-Sciences Po), Double Master of Public Administration (LSE-University of Toronto), MPA Dual Degree (LSE and Hertie), MPA Dual Degree (LSE and NUS), MPA Dual Degree (LSE and Tokyo), MPA in Data Science for Public Policy, Master of Public Administration and Master of Public Policy. This course is not available as an outside option.

Students should submit evidence of having taken a Microeconomics course before.

This course examines, using primarily an economics lens, the challenges and opportunities for designing and implementing effective policies in developed and developing countries. It explores the obstacles to the implementation of good policy and how to overcome them, relying on theory and evidence mostly from the economics and political economy literatures, relating to evidence-based policy design, to communication, political economy, media, parties, state capacity, and public opinion. The course aims to equip students with the skills and knowledge to critically evaluate policy proposals and outcomes, and to propose solutions for overcoming the obstacles to good policy making.

It proceeds in five sections:

1. Policy: Figuring out the solution. The role of economic theory and evidence in policy design and evaluation. (Tools from Microeconomics.)
2. Political Economy: Identifying a winning coalition. Impact of political institutions, media, parties, and interest groups on policy choices and implementation. (Tools from Political Economy.)
3. Communication: Building a winning coalition. Identify and overcome the cognitive biases and heuristics that limit communication. (Tools from behavioural economics and political science. )
4. Implementation: Making it work. Often, the main barrier to success is the lack of capacity to put it in place. (Tools from organizational economics and development.)
5. Solutions: Making reform work. Student presentations taking all the above into account.

22 hours of lectures and 16 hours and 30 minutes of seminars in the AT.

The course will teach as usual in week 6

Students will be expected to produce four intermediate deliverables on the project at the end of each phase.

There is no set text book for this course but many readings that offer insight into the politics of policy-making, including

• Growth Diagnostic Framework (Hausman, Rodrik and Velasco)
• Rodrik, D. (2008). Second-best institutions. American Economic Review, 98(2), 100-104.
• Acemoglu, D., & Robinson, J. A. (2012). Why nations fail: The origins of power, prosperity and poverty (Vol. 4). London: Profile books.
• Thaler, R. H., & Sunstein, C. R. (2009). Nudge: Improving decisions about health, wealth, and happiness. Penguin.
• Jonathan Haidt. The Righteous Mind: Why Good People Are Divided by Politics and Religion., Penguin. 2012.
• Ezra Klein.  “Why we are polarized”. Simon and Shuster 2022
• Narrative Economics: How Stories Go Viral and Drive Major Economic Events by Robert J. Shiller, Princeton University Press. (2019).
• Garicano, Luis, and Luis Rayo. "Why organizations fail: models and cases." Journal of Economic Literature 54.1 (2016): Read careful section 5.1

Paper (50%) and group presentation (50%).

The course will be assessed through a policy project, developed over the entire duration of the course, that will require working together in a team. This will test the skills required of policy makers in the real world environment of policy formulation. In particular, the focus is on analysis, communication, argumentation, group/team working and policy design. This will involve two deliverables:

1. An individual paper written separately by each student, including the literature references motivating the key choices (50% of grade).
2. A group presentation in week 11 of the class in front of all the rest of the class involving also a Q&A (50% of the grade).