PPA 220A -- APPLIED ECONOMIC ANALYSIS

MASTER'S PROGRAM IN PUBLIC POLICY AND ADMINISTRATION
CALIFORNIA STATE UNIVERSITY, SACRAMENTO

FALL 2004

Professor: Rob Wassmer, Ph.D.

E-Mail: rwassme@csus.edu 

Home Page: http://www.csus.edu/indiv/w/wassmerr 

Office: Room 3037, Tahoe Hall

Class Location:  Tuesday, 6 - 8:50 p.m., 135 Calveras Hall; also re-broadcast on Saturdays on various cable channels (Comcast 15 -Sacramento, Charter 14 - West Sacramento, Charter 21 - Auburn, Volcano 60/78 - N. CA, Comcast 15 - Roseville) and on the Web (details forthcoming).

Office Phone: (916) 278-6304

Office Hours: Wednesday, 4:00 – 6:00 p.m.; and by appointment if necessary

Required Texts:

(1) Analyzing Policy: Choices, Conflicts, and Practices, Michael C. Munger, Norton (denoted as “Munger”), available for purchase at CSUS bookstore or on web at Amazon.Com;

(2) Microeconomics: The Easy Way, Walter J. Wessels, Barrons Publishing (denoted as “Micro”), available for purchase at CSUS bookstore or on web at Amazon.Com;

(3) The Economics of Public Issues, Roger Miller et. al, Addison-Wesley (denoted as “Public”), 13th Edition, available for purchase at CSUS bookstore or on web at Amazon.Com;

(4) The Armchair Economist. Steven E. Landsburg, Free Press (denoted as “Armchair”), available for purchase at CSUS bookstore or on web at Amazon.Com.

Course Objectives:

ü      Understand basic microeconomic concepts such as opportunity cost, supply and demand, elasticity, market equilibrium, industrial structure, etc, and its application to policy analysis using real world examples.

ü      Have a basic understanding of some of the technical tools used in policy analysis and their application in actual policy concerns (probability, timer value of money, benefit/cost assessment, etc.).

ü      Develop the knowledge to defend the basic Kaldor/Hicks approach to justifying the efficiency of government intervention through benefit/cost assessment.

ü      Be able to explain and offer examples of the five reasons that policy analysts offer for government intervention in a market economy (lack of information, firms acting as price setters, externalities, public goods, an inequitable distribution of income/wealth).

Internet Access and WebCT:

I will post outlines on material covered in class and other course related material on WebCT. Information on WebCT can be found at https://online.csus.edu/.  Please visit the site after you have secured a SacLink account number and password from CSUS.   I will also correspond with you through WebCT. Sometimes I will also ask you to read things off the Web.  Thus, access to the Internet and WebCT use is required for this class. If you do not have Internet access at work or home, access to it is provided to students at the university's library or various computer labs.  We will further discuss WebCT use on the first night of class.

Overview:

The purpose of this course is to expose you to the basic concepts and tools of microeconomics as they apply to public policy analysis. We will study how economists think about household decisions, business decisions, government decisions, and benefit/cost analysis.

The prerequisite for this course is the receipt of a B grade or above in a previous introductory (undergraduate) course in microeconomics (ECON1B in CSU or California community college system). Even though this is the official requirement, I will review basic microeconomic principles before assuming that you remember them. If your microeconomics is a bit rusty, Microeconomics:The Easy Way is the appropriate reference. I encourage you to thoroughly review this text before class starts.

Microeconomics offers many insights into understanding how business, government, and people interact. Some of the most serious problems that individuals and society face are economic based. An understanding of economics is therefore part of deriving solutions to these problems. As future public policy gurus, an understanding of the economic principles taught in this curse is essential to your ability to provide good public policy analyses.

A goal of mine has always been to try to improve the way that economics is taught to university students. I would consider myself a success if I could get you to learn some economics, appreciate its value to the career choice you have made, and to have a part of your brain think like an economist. Notice that I emphasize only a part of your brain. Good policy analysts have to also consider relevant political and administrative issues, and the social ramifications of proposed public policy. The development of these other parts of your brain will be accomplished through the other courses you take in this program.

I encourage you to share with me, even before teaching evaluations are given, your opinion on any of my teaching methods and constructive suggestions and how to improve them.  I truly appreciate such input and use it to try and continually improve the way I teach this course.

PPA 220A consists of one 165 minute meeting a week (a 15 minute break will be given in the middle of each class). Each week you should plan on devoting at least three hours outside of the classroom to study related to this course.

This course is taught in a distance education format.  There will be cameras in the classroom and microphones were you sit.  So others listening outside the classroom can hear you, you will need to turn on these microphones before speaking.  My understanding is that the classroom only has room for 20 to 30 students.  I anticipate that our enrollment will be greater than this.  Therefore, the official requirement is that you attend a minimum of 7 of the 13 classes.  To insure that this occurs, there will be a sign in sheet that I will pass around after the break during each Wednesday night meeting.  The class you miss on Wednesday night needs to be made up by watching it on TV or the Web.

I require that by each Wednesday night (after our first meeting) you submit to me by WebCT a well-developed question that you still have after doing the assigned reading for the current week.  I will post these questions, and my responses, on the public section of WebCT.  I encourage you to look them over each week and add your own comments to them.  This will be our own on going “chat room” and my hope is that will serve as a way to efficiently address all student questions on material and encourage student-to-student learning.

On each Wednesday there will also be a relatively short homework assignment that must be turned in through WebCT in electronic form.  I will grade your answers and post my suggested answer on WebCT also.

Your question and homework answer can only be turned in electronically on the Wednesday night that they are due (no exceptions).  An "A+", "A", "A-", B+", ..., "C", "C-", "D", or "F" (not turned in) will be recorded for each of these. There will 12 such assignments and only the grades earned on the top 10 will count.

Questions and comments pertaining to that night's class are encouraged during class. Other questions will be answered during my office hours. Office hours can also be used to handle a suggestion on how the class is taught, a general discussion of economics, the Public Policy and Administration Program, or your career plans.  You need to stop by and visit me during office hours at least once during the semester (a way of getting me to remember your name and another way of getting the participation part of your grade up).

The last 60 minutes of each night's class will be devoted to a student-led presentation and discussion on topics taken from Public and Armchair. Students will be asked to volunteer to lead at least one of these discussions.  Each of you is expected to interact during this and all discussions and a large portion of your classroom participation grade will be determined then.

Presentation:

Each student is required to make at least one short presentation and lead a discussion in class based upon the material in Public and Armchair.  The materials for this are in italics in the schedule below.  I will fill in the names of students designated to lead each discussion after the first week of class when it is finalized.  These presentations will be given with cameras rolling.  I believe that this is an important part of the experience.  In this field you will almost certainly be asked to testify and make presentations before a camera and this is the experience you need to do this effectively.  For all presentations, each student should prepare a one-page outline of their presentation.  Bring this outline to class for use in the presentation and send an electronic copy of it to me through WebCT. Each student should also watch their presentation and write a one-page critique of what they liked and did not like about it.  An electronic copy of this is due to me through WebCT no later than a week after the presentation is made.  As a guide, I will make the first presentation of this sort.  What need to be stressed in these brief presentations (10 minutes maximum – you will be stopped at that point) are the economic principles applied to a particular issue.

Classroom participation grades will be based on quality of presentation, write up of performance evaluation, and student's participation throughout other discussions held in course.

Examination Procedure:

Material for exams will be taken out of assigned reading, class time, and homework. I will provide a sample exam early in the semester.  If you have an illness or emergency, if at all possible, I expect to be notified before the exam takes place. If you fail to show up for an exam without contacting me, or if you cannot provide written documentation of why you missed, you will receive a zero on the exam.

Midterm: The first 90 minutes of class on October 27 will be devoted to taking an in-class midterm exam.  More details and an example will follow in class. 

Final:  A take-home final exam will be given out the last day of class (December 8) and due December 15.  This exam will be structured as a group project in which a small group of students will work together to answer a series of questions.  Though cooperation within groups is encouraged, there can be no cooperation across groups.  More details and an example will follow in class.

Grading Procedure:

Exam grades will be calculated using the following formula:

Percent Correct	Letter Grade	Number Grade
100-94	A+	4.3
93-89	A	4.0
88-84	A-	3.7
83-79	B+	3.3
78-74	B	3.0
73-69	B-	2.7
68-64	C+	2.3
63-59	C	2.0
58-54	C-	1.7
53-40	D	1.0
<40	F	0.0

A number grade will be assigned to everything you do. Your final grade will be calculated based on these number grades.

Your midterm exam grade accounts for 25 percent of your final grade. The final exam grade accounts for 30 percent of your final grade. The average grade earned on the 9 weekly-required assignments also account for 30 percent of your final grade. Classroom participation and your presentation make up the remaining 15 percent of your final grade. 

University policy for dropping this course will be followed. You must complete the midterm and final exam to receive a passing grade.

Schedule:

The following schedule lists the major topics covered and the assigned reading that accompanies them. I reserve the right to make minor changes and additions to the following schedule.  Underlined material is hyper linked and can be had by clicking on it from your web browser.

 

DATE	TOPIC	TEXT	LOCATION (Presenter)
Sept. 1	Course Overview
	Policy Analysis as a Profession	Munger	Chapter 1
	Criterion/Alternative Matrix	CIWMB Tire Study	pp. 78-102
	Deciding How to Decide	Munger	Chapter 2
	Discussion
	(1) The Power of Incentives: How Seat Belts Kill	Armchair	Chapter 1 (Wassmer)
Sept. 8	Exploring Economics	Micro	Chapter 1
	Scarcity and Choice	Micro	Chapter 2
	Economic Way of Thinking	Micro	Chapter 3
	Discussion
	(2) Rational Riddles: Why the Rolling Stones Sell Out	Armchair	Chapter 2 (____________)
	(3) Terrible Tradeoff	Public	Chapter 2 (____________)
	(4) Flying Friendly Skies	Public	Chapter 3 (____________)
Sept. 15	Demand and Supply	Micro	Chapter 4
	Elasticity	Micro	Chapter 5
	Theory of Demand	Micro	Chapter 6
	Short Run Output and Costs	Micro	Chapter 7
	Discussion
	(5) Truth or Consequences: How to Split a Check or Choose a Movie	Armchair	Chapter 3 (____________)
	(6) Costs of Terrorism	Public	Chapter 4 (____________)
	(7) Is Water Different?	Public	Chapter 6 (____________)
Sept. 22	Long Run Output and Costs	Micro	Chapter 8
	Perfect Competition	Micro	Chapter 9
	Monopoly	Micro	Chapter 10
	Discussion
	(8)The Indifference Principle: Who Cares If the Air is Clean?	Armchair	Chapter 4 (____________)
	(9) Choice and Life	Public	Chapter 8 (____________)
	(10) Smoking and Smuggling	Public	Chapter 9 (____________)
Sept. 29	Competition & Monopoly	Micro	Chapter 11
	Antitrust and Regulation	Micro	Chapter 12
	Discussion
	(11) Why Prices Are Good	Armchair	Chapter 8 (____________)
	(12) Rationing Health Care	Public	Chapter 11 (____________)
	(13) Effects of Minimum Wage	Public	Chapter 12 (____________)
Oct. 6	Benchmark Performance	Munger	Chapter 3
	Discussion
	(14) Why Popcorn Costs More at the Movies and Why the Obvious Answer is Wrong	Armchair	Chapter 16 (____________)
	(15) Lights Out in California	Public	Chapter 13 (____________)
	(16) The Internet Economy	Public	Chapter 14 (____________)
Oct. 13	Evaluation/Market Failure	Munger	Chapter 4
	Discussion
	(17) Why Taxes are Bad	Armchair	Chapter 7 (____________)
	(18) Coffee, Tea, or Tuition Free	Public	Chapter 16 (____________)
	(19) Keeping Competition Out	Public	Chapter 18 (____________)
Oct. 20	Experts and Advocacy	Munger	Chapter 5