Professor: Robert Wassmer, Ph.D.

Office: Room 3037, Tahoe (Business) Hall.

Office Phone: (916) 278-6304.

Office Hours: Wassmer --Thursday, 2:00-6:00 p.m. and if necessary by appointment;
Franklin -- Wednesday and Thursday, 4:30-5:30 p.m. and if necessary by appointment.

Course Held: Room 1027, Tahoe (Business) Hall,Thursdays, 6:00 - 8:50 p.m.

Required Texts:

(1) Policy Analysis: Concepts and Practice, Second Edition, Weimer
and Vining; Prentice Hall (denoted as W&V);

(2) Cost-Benefit Analysis: Concepts and Practice, Boardman, Greenburg,
Vining, and Weimer; Prentice Hall (denoted as BGV&W);

(3) Microeconomics: EZ-101 Study Keys, Lindeman, Barron’s Publishing (denoted as LIN).



The purpose of this course is to familiarize you with 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. These forms of "microeconomic thinking" will be used to analyze public policy issues throughout the course

The prerequisite for this course is the receipt of a "B" or above in a previous introductory (undergraduate) course in microeconomics. 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, the EZ-101 Study Keys outline is the appropriate reference. For a more complete review, pull out your old microeconomics textbook.

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 future 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 perhaps most important to have a part of your brain think like an economist after you leave this class. Notice that I emphasize only a "part" of you 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 parts of your brain will be accomplished through other courses you take in this program.

This course does not emphasize politics, but I do recognize the need to consider it. If during a lecture you feel a relevant political issue needs to be discussed, please bring it up. My formal training in political science is limited and I welcome the learning experience. I am telling you all of this up front to encourage you to share with me, even before teaching evaluations are given, your opinion on any of my teaching methods.

The course consists of one 165 minute meeting a week. (a 15 minute break will be given in the middle of each class meeting). Each week you should plan on devoting at least five hours outside of the classroom to study related to this course. It is important that you attend all lectures. To help insure and reward attendance, I require that each Thursday you hand in a one to two-page, double-spaced, and typed summary of the reading assigned for the following week. (On the first day of class I will provide an example.) You will also be asked to complete written exercises out of the assigned texts. Your reading summary and exercises can only be turned in on the Thursday that they are due (no exceptions). This acts as a form of attendance. An "A", "B", "C" or "F" (fail) will be marked on each of these. There will 13 such assignments and you are allowed to drop the lowest two grades.

I also ask each of you to attend at least one of the seminars that are sponsored by the Public Policy and Administration Department and the School of Social Sciences and Interdisciplinary Studies. There will be three or four of them given throughout the fall 1998 semester from 4:00 – 5:30 p.m. (a schedule will be forthcoming). To demonstrate attendance at one of these seminars you need to write up a two-page, double-spaced and typed summary and critique of the seminar. The grade received on this summary will be averaged into your Thursday attendance grade. To pass this course you may not opt out of this assignment. If you cannot make any of the seminars, I will provide you with a paper to do the same thing with.

Questions and comments pertaining to lecture are encouraged during lecture. Other questions will be answered during my office hours. Office hours can also be used to handle a complaint or suggestion on how the class is taught, general discussion of economics, the Public Policy and Administration Program, or your career plans. We are fortunate to have a graduate student teaching assistant for this course. You should utilize her office hours. During her office hours she can be considered your own personal tutor, please put her to good use.

Examination Procedure:

There will be three 75-minute examinations (October 1, November 5, and December 17 {final exam date}). All exams will be non-cumulative and closed book. After a short break, lecture will follow the first two exams. Material for exams will be taken out of assigned reading, lecture, 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.

Paper Requirement:

Each student must also complete a 15 to 20 page, double-spaced and typed paper on a simple benefit/cost study of their choice. The paper will utilize the benefit/cost techniques that are taught throughout this course. In writing this paper, the student must work with a client from the community, local government, or state government. To better assess the real-world needs of a benefit/cost study, the student will interview this client before writing the paper and will present the results to them after the paper is completed. The best papers will also be put on a web site devoted to this topic. You should immediately begin thinking about a topic of local interest that you could conduct a simple benefit/cost study on and a potential client to work with. Deborah Franklin (our teaching assistant) and I can help in this area. For ideas, take a look at the bibliography that begins on p. 445 in BGV&W. An assignment will be to choose two articles from under one of the 25 topics included on p. 445, read the articles, and write a double-spaced, one-page summary of each. You can begin this at any time. Further details on the paper will be forthcoming in class. The paper is due on December 17. Each day it is late, you will lose one full grade.

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.

The average of your three exam grades accounts for 50 percent of your final grade. The Thursday assignment grade accounts for 25 percent of your final grade. The paper grade makes up the remaining 25 percent your final grade. University policy for dropping this course will be followed. You must take the final exam and complete the paper to receive a passing grade.


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.


Sept. 3 Course Overview    
  What is Policy Analysis? W&V 1
  Professional Ethics W&V 2
Sept. 10 Microeconomic Review    
  Introduction LIN 1
  Theory and Models LIN 2
  Basic Concepts LIN 3
  Supply and Demand LIN 4

Consumer Choice





Sept. 17 Microeconomic Review    
  Firm Costs LIN 7
  Profit Maximization LIN 8
  Imperfect Competition LIN 9
  Production Markets

Non-Market Allocation








Sept. 24 Meeting at CSUS Cancelled

(Required Alternative is

Attendance at Envisioning California Conference. Details given Sept. 3.)

Oct. 1 Exam 1    
  Limits of Competition W&V 4
  Public Policy Rationale W&V 5
Oct. 8 Government Failures W&V 6
  Correcting Market Failure W&V 7
Oct. 15 Policy Problems W&V 8
  Introduction to CBA BGV&W 1
Oct. 22 Conceptual Foundations BGV&W 2
  Valuing Benefits/Costs

Summary of 2 Papers Due

Schedule Meeting

Oct. 29 Discounting BGV&W 4
  Social Discount Rate BGV&W 5
Nov. 5 Exam 2    
  Uncertainty BGV&W 6
Nov. 12 Option Value BGV&W 7
  Existence Value BGV&W 8
Nov. 19 Demonstrations BGV&W 9
  Observed Behavior BGV&W 10
Nov. 26 No Class    
Dec. 3 Contingent Valuation BGV&W 11
  Shadow Prices BGV&W 12
Dec. 10 Weighted CBA BGV&W 13
  Accuracy of CBA BGV&W 14
  Doing Well and Good W&V 14
Dec. 17 Exam 3    
  Paper Due