Chapter Two

Policy Formulation and Development

2.1 Definition and Concept of Policy Making/Formulation
 Political scientists argue that policy formulation is best
explained by describing it as a process and not as a ‘one
time affair’.
 Public policies also do not evolve with the activities of
top level executives alone. It also involves the active
participation of non-political groups, private players, civil
society organizations and so on.
Thus the process of policy formulation involves negotiation,
bargaining and accommodation of many different interests,
which eventually becomes a policy with the process of
legitimizing.
 Policy Formulation and Development
 Policy formulation is quite a critical phase of the policy process. The
success or failure of a policy depends mainly upon the policy designs
and policy formulation processes.

 Policy formulation involves the process of identifying and crafting a set

of policy alternatives to address a problem and narrow down the
alternatives to arrive at a final policy decision.
 According to some scholars, policy formulation takes up the “what”
questions: “What is the plan for dealing with the problem? What are
the goals and priorities? What options are available to achieve those
goals? What are the costs and benefits of each of the options? What
externalities, positive or negative, are associated with each
alternative?”

 Policy formulation is also takes place in government bureaucracies, in

interest group offices, in legislative committee rooms, in meetings of
special commissions, in think tanks with details often formulated by
staff.
 2.2 Policy Making/Formulation Techniques

Various techniques are involved in reaching sound

and rational policy decisions and in converting
policy proposals into policy. A variety of techniques
and tools are used for improving and enhancing
the policy formulation process. Some of the
techniques include:
 Cost-benefit Analysis;
 Economic Forecasting;
 Operations Research and Systems Analysis; and
 PPBS Approach.
 i) Cost-benefit Analysis
 Cost-benefit analysis is a very useful technique which is
used in the fields of economics, mathematics,
statistics, operations research, etc.
 This technique is of great help to the policy makers
while framing policies and offers advice on the
formulation and development of public policy.
 Thus the potential benefit of the policy is calculated.
This technique helps the policy maker to opt for a
policy or programme which offers the maximum net
benefit.
However, critics argue that everything cannot be
quantified.
 ii) Economic Forecasting
 Forecasting models were developed by the Organization for
Economic Cooperation and Development (OECD) in the 1960s and
1970s in order to forecast trends.
 Most governments have a model of the national economy which is
used to show the impact of policy changes on the economy.
 Such models have a strategic role to play in formulating economic
policies. With the information and knowledge that is available, this
model brings out various assumptions and suggests alternatives to
try out.
For example, if the government likes to know ‘what would be the effect
if the income of women increases by 2 per cent?’ such a forecasting
model would be helpful to the government in choosing the policy
alternative. The forecast might come up with various assumptions like it
would contribute to economic welfare, growth of the individual or
improved standard of living, etc.
Thus, forecasting helps in justifying policy and expenditure plans and is
also useful to explore various policy alternatives. However, it should also
be noted that forecasting may not be accurate at all times.
 iii) Operations Research and
Systems Analysis
Operations Research (OR), Systems Analysis and Decision Analysis are other
important techniques in policy formulation. These techniques has also
share the following characteristics:
 A bias for action and improvement;
 The values of ‘rationality’ and ‘efficiency’;
 Utilization of quantitative models; and
 Holistic view and examination of all relevant variables.

The purpose of the OR approach is to help policy makers to determine

policy and actions in a scientific manner.
These techniques help a policy maker to choose a course of action by
investigating the problem and selecting the alternatives in the light of their
consequences.
They have a wide application in government, especially in health, social
services, law enforcement, etc.
 iv) PPBS Approach
 The Planning-Programming-Budgeting System (PPBS) was first adopted
in the US in the 1960s both for increasing administrative performance
and for improving the policy making process in the military field.
 The overall purpose of PPBS was to create rationality in the budgeting
process, by requiring administrators to plan long range organizational
goals and establish programmes to attain the goals.
 With the use of PPBS, the budgeting process is evaluated at every step.
PPBS enable a thorough examination of goals related to a policy or
programme.
 Then, analysis of alternatives is made to find the most effective way of
achieving programme/policy objectives at least cost. Thus, PPBS tries to
review the outcome of the policy/programme at every stage.
Summery
Each of the earlier mentioned techniques has its own merits and drawbacks.
Use of appropriate techniques helps in formulating effective policies.
Especially while formulating policies, it is always good to use more than one
method and draw inferences. This would help the policy makers to formulate
the right policy.
 2.3 Approaches/Models of Policy Formulation
and Development
 There are various models or approaches to the process of policy
formulation and development. Before focusing on the approaches
or models of policy formulation, it is critical to understand what an
‘approach’ is and what a ‘model’ is. While an approach is a broad
framework to understand a theme or a subject, a model is a well-
constructed concept.
 Various approaches and models have been developed by policy
scientists in order to simplify the policy formulation process.
Approaches/ Models are thus helpful to clarify our thoughts about
policy formulation and to develop the relevant knowledge of
policies.
 Some of the approaches/models of policy formulation include the
following: Rational, Incremental, Group Theory, Institutional, Game
Theory and Systems models.
 2.3.1 Rational Model
 The Rational Model of Policy Making is also called the Decision Making Model.
Under this model, the rationality principle emphasizes that policy formulation is
making a choice among policy alternatives on rational grounds. Rational policy
making is “to choose the one best option”.
 This model argues that in order to formulate effective policies, policy makers
should be rational and the model suggests five steps to be followed in policy
making. A policy is said to be rational only when these steps are followed while
formulating the policies.
The steps may include:
1. Identification of society’s value preferences and their relative weights;
2. Finding of policy alternatives that are available;
3. Evaluation of the consequences of each policy alternative;
4. Calculation of the ratio of benefits to costs for each policy alternative; and
5. Selection of the most efficient policy alternative.
Herbert Simon, whose name is associated with this rational model, talks of three
kinds of activities included in policy making processes: intelligence activity, design
activity and choice activity.
 The intelligence activity searches the situation calling for a decision.
 The design activity identifies, develops and analyzes possible courses of action.
 The chosen activity deals with selecting a particular course of action from those
available.
 2.3.2 Incremental Model
 The Incremental Model to Policy Formulation was put forward by Charles Lindblom,
in his book ‘Policy Making Process’. Of all the models, the Incremental Model is
popular because of the fact that it fits well with what actually goes on in
government.
 Policies generally have societal character, since they determine the fate of people.
For this reason any policy should not be formulated on a larger scale without
understanding its repercussions.
 Hence, Lindblom has proposed the Incremental Model of Policy Making. According
to Lindblom, no policy maker or government would like to formulate a new policy. If
at all the policy maker wants to formulate a new policy, she/he would not do it on a
larger scale. So policies are introduced on a smaller scale in the beginning and then
they are expanded gradually. Under this model, Lindblom states that the policies are
expanded slowly and steadily, after knowing the workability and feasibility of the
policy.
 The Incremental Model is widely used in a democracy. However, the incrementalism
has been criticized on the ground that the problems being encountered by the
governments are so crucial and critical in nature that the changes brought in the
policies through incrementalism are not sufficient enough to cope with existing
realities.
 They criticizes this model, by stating that ‘the most harmful effect of the incremental
change argument is that it paralyzes efforts and thus tends to be a self-fulfilling
prophecy’.
 2.3.3 Group Theory Model
 The Group Theory Model was put forward by a Japanese sociologist, Gaetano
Mossaco. Group theory is an approach which seeks to maintain equilibrium
in the society, balancing the interests of various groups.
 According to this theory, public policy is a product of group struggle.
Individuals having common interests and demands join hands together and
form formal or informal groups, in order to influence the policies of the
government to suit their needs.
 On the basis of the equilibrium reached in the struggle of various groups in
the policy process, public policies are formulated.
 Policy formulators succumb to the pressures of the dominant groups through
bargaining, negotiating and compromising.
Thus, in the process of group struggle, the demands and desires of the pressure
groups enter the government arena and policy is formulated.
 2.3.4 Elite Theory Model
 According to this model, public polices are formulated as per the preferences and values
of the elites. This model postulates that a society is divided into a few segments – those
who have the power and those who do not have it.
 Policy in this social set up is not determined by the people or the masses. The ruling elite
i.e. the political executive decides the policy and this is finally carried out by the
bureaucrats who form part of the next segment of the elites.
Thus, according to this model, the policies tend to flow from the top and do not move up
from the bottom. Every society has elites competing with each other for power which
ultimately paves the way to formulating public policy.
The elite theory explains that competition to influence policy is between elites in power and
other elites attempting to come to power.
The common masses on whose demands the public policies are formulated have limited or
no influence in determining the public policies. Instead, policies are formulated by the ruling
elite and the governing elite. The bureaucrats carry those into effect.
Though in a democracy the elite theory is not directly implemented, its influence is found in
an indirect manner.
 2.3.5 Institutional Model
 Public policy is an institutional activity since it is formulated through cooperative
effort. Policy formulation is not an individual effort. Many people or many agencies
join together and formulate a policy by following a set of rules and procedures. The
institutions not only constitute crucial and significant nodal points for policy
formulation, but also determine the formulation or adoption of policies, their
possible content and directions. The structures of the institutions and their
arrangements and interactions have a significant impact on public policies.

 This model argues that policy formulation is the outcome of the internal agenda of
government institutions rather than the result of external pressures and influences.
 This model states that in policy formulation, power is exercised by different
individuals and groups such as the Prime Minister, Members of Parliament,
bureaucrats, leaders of interest groups.
 In this model, policies do not take the shape of a public policy unless they are
adopted and implemented by government institutions.
 Con…
Thus, government institutions give public policy three distinctive
characteristics as follows:

• Firstly, the government gives legal authority to policy, as it

gets the approval of the law making body.
• Secondly, a policy gets universal character, as it can be
applied to the entire society.
• Thirdly, public policy is backed by coercive power, since it is
formulated by the government. The government can thus
impose legal sanctions on violators of its policies.
 2.3.6 Game Theory Model
 Game theory talks about strategic decisions that players make in a competition,
where each participant or player seeks to maximize gains and minimize losses. In a
competition, one person’s gain becomes another person’s loss. On similar lines,
the Games Theory Model is applied for policy formulation as well. A public policy
may not provide advantages to all sections of the people.

 Formulation of a particular policy may be gainful to one section of the society,

whereas to another section it might be a loss.

 For example, formulation of gender-sensitive policies may require men to give up

certain privileges and take on certain responsibilities in order to achieve greater
equity in development outcomes. Such policies are beneficial to women while
men may become losers in such policies.
 2.3.7 Systems Model
 According to this model, a policy is the response of the political system to the changing
demands and desires of the people. The political system consists of various
interrelated institutions and activities in a society that comes up with policy decisions
in the society.
 The environment provides inputs to the decision process in the form of demands and
supports. Demands are claims of individuals or groups to satisfy their needs.
 Support is rendered when individuals or groups accept the decisions and actions of the
political system that are made in response to demands.
 The inputs into the policy process are provided by outside interests particularly from
pressure groups, consumer groups and interest groups. Such environmental inputs into
the political system are converted into outputs or policies. There is a concept of
feedback in this model, which serves as a tool to know the advantages and
disadvantages of the policy output. The errors in the policy thus get rectified through
feedback.
 The Systems Model views the policy process in terms of conversion from inputs into
policy outputs and then to outcomes. Thus, the policy making process has been
regarded as a ‘black box’ which converts the demands of society into policies.
 2.3.8 Process Model
Policy creation is a process that typically follows a sequence of steps or stages:
 Identification of a problem (also called "problem definition") and demand for
government action. Different stakeholders may define the same issue as different
problems.

For example, if homeless people are using illegal drugs such as heroin in a city park,
some stakeholders may define this as a law enforcement issue (which, in their view,
could be best solved if police presence in the park is stepped up and if the individuals
using illegal drugs are arrested and punished); on the other hand, other stakeholders
may view this as a poverty and public health issue (which, in their view, could be best
solved if public health nurses and government medical doctors and substances abuse
counsellors were sent to the park to do outreach with the drug-using individuals, and
encourage them to voluntarily enter “detoxification” or rehabilitation programs).
 Agenda setting
Cont…
 Formulation of policy proposals by various parties (e.g., citizen groups, congressional committees,
think tanks, interest groups, lobby groups, non-governmental organizations)
 Policy selection/adoption and legal enactment of a selected policy by elected officials and/or
houses of representatives. At this stage, policy legitimation is conferred upon the selected policy
solution(s).
 Policy implementation, which involves civil servants putting the selected policy option into practice.
Depending on the choice made by the executive or legislative branch, this could involve creating
new regulation (or removing existing regulations), creating new laws, creating a new government
program or service, creating a new subsidy or grant, etc.
 Policy evaluation. After the policy has been in place for a year or several years, civil servants or an
independent consulting firm assesses the policy, to see if the goals were achieved, if the policy was
implemented effectively, etc.
This model, however, has been criticized for being overly linear and simplistic. In reality, stages of the
policy process may overlap or never happen. Also, this model fails to take into account the multiple
factors attempting to influence the process itself as well as each other, and the complexity this entails.
 Questions for unit Summery
1. Define policy formulation process and concepts with
examples that are not mentioned in your text.
2. By figure outing a given societal problem; and formulate a
new policy by using one of the techniques you studied.
3. Explain different approaches of policy formulation through
providing real examples from the community/governments
document etc…
 The End
Thank You!