SYLLABUS FOR

PPA 220B � APPLIED ECONOMIC ANALYSIS II

GRADUATE PROGRAM IN PUBLIC POLICY AND ADMINISTRATION
CALIFORNIA STATE UNIVERSITY, SACRAMENTO

SPRING 2003

 

Professor: Rob Wassmer, Ph.D.

E-Mail: rwassme@csus.edu or rwassme@attbi.com

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

Class Location: Tuesday, 6 - 8:50 p.m., 4021 Library; or Thursday, 6 - 8:50 p.m., 207 Douglas Hall

Office: Room 3037 Tahoe Hall

Office Phone: (916) 278-6304

Office Hours: Tuesday and Thursday, 4:30 - 6:00 p.m.; and by appointment if necessary

Prerequisite: A grade of B- or higher in PPA 220A.

Required Texts:

(1) Coursepack which includes selected chapters of Public Finance, 6th Edition, Harvey S. Rosen, McGraw-Hill Irwin; and State and Local Public Finance, 2nd Edition, Ronald C. Fisher, Irwin;

must be purchased at CSUS bookstore;

(2) Cost-Benefit Analysis for Public Sector Decision Makers, Diana Fuguitt and Shanton J. Wilcox, Quorum Books;

           can be purchased at CSUS bookstore or click here to purchase at Amazon.Com;

(3) Heaven's Door: Immigration Policy and the American Economy, George J. Borjas, Princeton University Press;

            can be purchased at CSUS bookstore or click here to purchase at Amazon.Com.

There will also be various supplemental readings assigned throughout the semester. These are listed in the schedule below. Copies of these readings are either available directly from the Internet (an electronic link is provided below) or I will provide a paper copy in class.

Internet:

This course requires that you have an internet account that allows access to the World Wide Web. If you do not have one at home or work, you can get one through CSUS. At my homepage I will post an outline of each meeting and a description of the homework that is due at the following meeting. These will be available by 4 p.m. the day of class. There will also be other handouts posted at this site.

Objective:

At the end of PPA 220B, it is expected that a student that attends all meetings will:

(1) Understand the basic process of how to conduct a benefit/cost assessment and have a working knowledge of some of the specific techniques necessary to do it.

(2) Develop a basic understanding of key concepts used by economists in their study of state and local public finance (structure of government, incidence of a tax, effect of a subsidy, etc.).

(3) Be able to accurately summarize key institutional changes in California's intergovernmental climate (Serrano vs. Priest, Proposition 13, ERAF, etc.) and the policy impacts that they continue to have.

(4) Use the tools of policy analysis to reach evaluatory conclusions on key policy concerns affecting the state (for example: immigration, drug legalization, school vouchers, low-income housing etc.).

This course will expose the graduate student of public policy to basic public economics through the study of market failure, public choice, government organization, expenditure, taxation, and state and local government applications specific to California. The student will be expected to learn some simple economic theory; but keep in mind that the goal in doing so is to better understand, analyze, and critique existing and proposed government policies.

Method:

Each week, students will be required to complete a well-developed question from that week's readings and written answers to questions related to the readings. We will go over assignments at the meeting that they are due. There is a mid-term assignment that is a five to ten-page prospectus on a hypothetical benefit-cost study that could be conducted as a Master's thesis, and a final exam that is take home and to be done independently.  The final exam will consist of four essay questions.

I will lead the presentation of background material.  Students will lead the presentation of discussion material.


Schedule:

This class will meet a total of 15 times throughout the semester. The readings for each meeting are given below. A chapter out of Rosen is designated by a "R", Fisher by a "F",  Fuguitt/Wilcox by a "FW", and Borjas by a "B".

Meeting 1 (Jan. 28 or 30)

Background on Benefit-Cost Analysis

FW (Chapter 4) - Economics and Cost-Benefit Analysis

FW (Chapter 5) - Economic Valuation of Individual Preferences

FW (Chapter 6) - Who is Society?

FW (Chapter 7) - With and Without Analysis

FW (Chapter 8) - Aggregate Benefits and Costs

FW (Chapter 9) - Present Value of Benefits and Costs Over Time

FW (Chapter 10) - Decision Criteria

FW (Chapter 11) - Discount Rate

FW (Chapter 12) - Inflation

Meeting 2 (Feb. 4 or 6)

Background on Benefit-Cost Analysis

FW (Chapter 13) - Time Horizon

FW (Chapter 14) - Uncertainty and Risk

FW (Chapter 15) - Principles of Cost-Benefit Analysis

FW (Chapter 16) - Identifying Benefits and Costs

FW (Chapter 17) - Market Valuation

FW (Chapter 18) - Contingent Valuation

Discussion

Homework from Meeting One (1)________________________________

Mead (Link), 2001, Making Birth Control More Accessible to Women: A Cost-Benefit Analysis of Over-the-Counter Oral Contraceptives (2)________________________________
(ignore request for password)

Meeting 3 (Feb. 11 or 13)

Background on Benefit-Cost Analysis

FW (Chapter 19) - Travel Cost Method

FW (Chapter 20) - Hedonic Pricing Method

FW (Chapter 21) -Valuation of Human Life

FW (Chapter 22) - Cost-Effectiveness Analysis

FW (Chapter 23) - Principles for Identifying

Discussion

Hahn, Tetlock, and Burnett (Link), 2001, Should You Be Allowed to Use Your Cellular Phone While Driving? (3)________________________________

Hahn and Dudley (Link), 2002, The Disconnect Between Law and Policy Analysis: A Case Study of Drivers and Cell Phones (4)________________________________

Meeting 4 (Feb. 18 or 20)

Background on California's State and Local Fiscal Structure

LAO, (Link), 2002, Cal Facts: California's Economy and Budget in Perspective

F (Chapter 1) - Why Study State and Local Public Finance

F (Chapter 4) - Demand for State and Local Goods and Services

Discussion

Chapman, (Link), 1998, The Continuing Redistribution of Fiscal Stress: Long Run Consequences of Proposition 13, pp. 1-19 (5)________________________________

Chapman, (Link), 1998, The Continuing Redistribution of Fiscal Stress: Long Run Consequences of Proposition 13, pp. 20 - 40 (6)________________________________

Meeting 5 (Feb. 25 or 27)

Background on California's State and Local Fiscal Structure

F (Chapter 5) - Public Choice through Mobility

F (Chapter 6) - Organization of Sub-National Government

Discussion

Chapman, (Link), 1998, The Continuing Redistribution of Fiscal Stress: Long Run Consequences of Proposition 13, pp. 41-53. (7)________________________________

Chapman, (Link), 1998, Proposition 13: Some Unintended Consequences (8)________________________________

Wassmer, (Link), 2003, Urban Devolution and Metropolitan Local Governance in California's Next Half Century of Growth (9)________________________________

Meeting 6 (March 4 or 6)

Background on California's State and Local Tax Structure

LAO, (Link), 2001, California's Tax System: A Primer

F (Chapter 14, Handout) - Property Tax: Economic Analysis and Effects

F (Chapter 15) - Sales and Excise Taxes

F (Chapter 16) - Income Taxes

Discussion

Brunori, (Link), 2001, To Preserve Local Government, It's Time to Save the Property Tax (10)________________________________

Brunori, (Link), 2000, The Politics of State Taxation: Random Musings on the Sales Tax (11)________________________________

Doerr, (Link), 2003, Notion of Expanding State Sales Tax Does a Disservice To Us All (12)________________________________

Meeting 7 (March 11 or 13)

Background on California's State and Local Tax Structure

R (Chapter 12) - Taxation and Income Distribution

R (Chapter 13) - Taxation and Efficiency

R (Chapter 14) - Efficient and Equitable Taxation

Discussion

Caltax, (Link), 2003, Increasing the California Income Tax is a Job Killer (13)________________________________

Institute on Taxation and Economic Policy, (Link), 2003, State and Local Taxes Hit Poor and Middle Class Far Harder  (14)________________________________

Institute on Taxation and Economic Policy, (Link), 2003, California Taxes Poor at Highest Levels (15)________________________________

_____________________________

Suggested (Optional) Meeting 7.5 (March 12)

California Budget Project Conference on Proposition 13: Are Californians Better Off Than They Were 25 Years Ago?,
8:00 a.m. to 5:00 p.m., information available here, write a two-page summary/critique of a session for extra credit

_____________________________

Meeting 8 (March 18 or 20)

Background on California's State and Local Expenditure

R (7) - Income Redistribution: Conceptual Issues

R (8) - Expenditure Programs for Poor

Discussion

California Budget Project, (Link), 2002, What Would be the Impact of Reinstating the 10 and 11 percent CA Income Tax Rates? (16)________________________________

Reed and Swearingen, (Link), 2001, Poverty in California: Levels, Trends, and Demographic Dimensions (17)________________________________

Meeting 9 (March 25 or 27)

Background on California's State and Local Expenditure

F (7) - Costs and Supply of State and Local Government Services

F (8) - Pricing of Government Goods: User Charges

Discussion

Homework from Meeting 8 (18)________________________________

California Budget Project, (Link), 2002, Options for Balancing the Budget: Reinstating the VLF (19)________________________________

Meeting 10 (April 1 or 3)

Background on California's Budget Proposals and Structural Reforms

California Budget Project, (Link), 2003, Governor's Proposed 2003-04 Budget

LAO, (Link), 2003, 2003-2004: Overview of the Governor's Budget

Discussion

Hill, (Link), 2002, States Fiscal Fortunes Have Rose and Have Fallen with Stock Market (20)________________________________

Delsohn, (Link), 2002, Business Tax Breaks Face Scrutiny (21)________________________________

Canciamilla, (Link), 2002, Budget Crisis Underscores Needed Reform (22)________________________________

Weintraub, (Link) 2003, As a Few Rich Guys Go, So Goes State Budget (23)________________________________

Meeting 11 (April 8, no meeting on April 10)

Workshop to Assist Students in Producing Benefit-Cost Prospectus

Meeting 12 (April 22 and 24)

Benefit-Cost Prospectus Due

Background on Immigration Policy

B (1) - Reframing Immigration Debate

B (2) - Skills of Immigrants

B (3) - National Origin

B (4) - Labor Market Impact

Discussion

Homework from Meeting 10 (24)________________________________

B (5) - Economic Benefits from Immigration (25)________________________________

B (6) - Immigration and Welfare State (26)________________________________

Meeting 13 (April 29 or May 1)

Background on Immigration Policy

B (7) - Social Mobility Across Generations

B (8) - Ethnic Capital

B (9) - Ethnic Ghettos

B (10) - Goals of Immigration Policy

Discussion

Homework from Meeting 12 (27)________________________________

B (11) - Proposal for Immigration Policy (28)________________________________

Anderson, (Link), 2000, Muddled Masses (29)________________________________

Meeting 14 (May 6 or 8)

Background on Drug Legalization Policy

Miron and Zwiebel, (Handout), 1995, The Economic Case Against Drug Prohibition

U.S. Drug Enforcement Agency, (Link), 2002, Speaking Out Against Drug Legalization

Discussion

Homework from Meeting 13 (30)________________________________

Hall, (Link), 1998, Creating Space for a More Reasoned Debate About Drug Policy (31)________________________________

UC-Berkeley (Link), 2001, New Drug Study Reveals Legalization is Not Only Alternative (32)________________________________

Meeting 15 (May 13 or 15)

Take Home Final Exam Given Out

Background on Vouchers for K-12 Public Education

Ladd, (Link), 2002, School Vouchers: A Critical View

Neal, (Link), 2002, How Vouchers Could Change the Market for Education

Discussion

Chubb and Moe, (Handout), 1995, America's Public Schools: Choice is a Panacea (33)________________________________
School Choices, (Link), 2003, Mythconceptions About School Choices (34)________________________________

National Education Association, (Link), 2003, Vouchers (35)________________________________
American Federation of Teachers, (Link), 2003, Voucher Home Page Reports (36)________________________________

Heritage Foundation, (Link), 2001, California Public School Choice (37)________________________________

Final Exam Time (May 20 or 22)

Take Home Final Exam Due


Grades:

You will be required each week to complete a one sentence, well-developed question that relates to a topic that you do not understand from that week's readings and answers to assigned homework questions.  This is not required for the first meeting.  The written answers to homework will be looked over and assigned grades ranging from A+ (4.3) to D (1.0), and F (0.0 - for not completing on time). A separate grade for each will be given and a total average derived for overall homework grade in class. You may drop your two lowest total homework grades (this also allows for the possibility of missing two class meetings). The average homework grade is weighted as 25 percent of your final course grade.  The benefit-cost prospectus counts for 25 percent of your final grade and 25 percent comes from the take-home final exam. The remaining 25 percent of your grade is based on classroom participation and your required discussion presentations.  You must complete the benefit-cost prospectus and final exam to pass the class.

Scoring:

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