Lesson Report:
## Title: Midterm Prep—Building a Policy-Analysis “Sorting System� (Grievances → Policy Problems → Market Failures)
**Synopsis (2–3 sentences):**
This session focused on preparing students for the upcoming midterm by consolidating course concepts into a single step-by-step system for analyzing real-world issues like a policy analyst. The instructor reviewed how to (1) identify a grievance, (2) categorize it as a condition vs. policy problem, and (3) diagnose why the problem persists using market-failure concepts (externalities vs. internal market failures). The class ended by launching a small-group activity where students selected new, real-world grievances and began practicing the same diagnostic process expected on the exam.
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## Attendance
– **Absent mentioned:** Not specified by name/number (instructor noted low attendance: “not many people… where is everybody today?â€�).
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## Topics Covered (Chronological, detailed)
### 1) Course Logistics + Purpose of the Midterm (Why this exam format)
– **Midterm timing:** Instructor noted the midterm is coming up next week (stated as “next Friday, next Thursdayâ€�—likely meaning *late next week*).
– **Why no “example questionsâ€� provided:**
– Instructor explained that rather than handing out sample questions, the class will *practice the same type of questions* during the week.
– **Why an in-class midterm (instead of a take-home memo):**
– Historically the midterm was a **take-home policy memo**, but the instructor changed the format due to concerns about submissions reflecting AI output rather than student learning.
– Writing will still exist in the course, but will be **reserved for the final assignment**, not the midterm.
– **Midterm objective (skills being assessed):**
– Demonstrate the “basic infantileâ€� early-stage analyst skill: **viewing issues through the eyes of a policy analyst** (sorting/diagnosing), not yet full policy analysis or policy-cycle evaluation.
– Address student feeling that concepts have seemed like a “shotgun approachâ€� by organizing them into a coherent system.
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### 2) Rebuilding the Core System: Start With a “Grievance�
– **Foundational premise:** Before analyzing public policy, always start with the concept of a **grievance**.
– **Definition (class discussion + instructor refinement):**
– A grievance = a **complaint** about something happening in society.
– Must be **societal in nature** (affects multiple people, not just an individual).
– Instructor cautioned against defining it as “something that must be changedâ€� too early; the “changeable by governmentâ€� question comes in the next step.
**Examples mentioned of grievances (illustrative):**
– High price of electricity.
– Water being turned off.
– Domestic violence (used later for nuance).
– (Earlier course examples referenced later: scooters on sidewalks, smog/air pollution, traffic.)
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### 3) Categorizing Grievances: “Condition� vs. “Policy Problem�
– **Why categorize:** Even if we *want* to fix a grievance, we must decide whether **public policy** is an appropriate tool.
– **Two categories introduced:**
– **Condition**
– **Policy problem**
#### A) Initial student framing (and instructor correction/nuance)
– Students initially described:
– Condition as something “inevitableâ€� / something the government “cannot solve.â€�
– Instructor clarified a key nuance:
– It’s not necessarily that the issue is *physically impossible* to solve.
– The crucial distinction is whether **we (society) believe the government has responsibility** to solve it.
#### B) Working definition used in class
– **Policy problem:** A grievance that society believes the **government has a collective responsibility** to address.
– Rationale can include:
– Other governments have solved similar issues before.
– The government has the means/capacity to solve it.
– **Condition:** A grievance that, for some reason, society does **not** believe the government is responsible for solving.
– Reasons this belief may occur:
– **Cultural values** (issue not prioritized; norms promote endurance/acceptance).
– **Feasibility/cost** (too expensive or impractical).
– **Context mismatch** (solutions that worked elsewhere may not work locally).
#### C) Key dynamic point
– **Conditions can become policy problems over time** (and vice versa), due to:
– Technological change
– Economic change (government wealth/resources)
– Cultural shifts
– Changing public expectations of government
#### D) Process checkpoint
– If a grievance is categorized as a **condition** → stop (outside scope of public policy action for now).
– If a grievance is a **policy problem** → proceed to diagnosis (why is it happening/why is it persisting?).
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### 4) Diagnosing the Root Cause: Why Didn’t the Market Fix It?
– Instructor framed diagnosis within a typical assumption of capitalist societies:
– Many issues are expected to be resolved by **markets**.
– If a serious issue persists, ask: **what went wrong—why did the market fail?**
– Market failure categories reviewed:
1. **External market failures (externalities)**
2. **Internal market failures** (three subtypes discussed)
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### 5) External Market Failures: Externalities (with detailed examples)
#### A) Definition built in discussion
– **Externality:** Effects experienced by **third parties** outside the buyer/seller transaction who did not consent or cannot meaningfully consent.
– For this course’s problem-solving focus, emphasis is on **negative externalities**.
#### B) Examples used
– **Coal heating example (negative externality):**
– Buyer and seller transact for coal.
– Third parties (neighbors/community) suffer pollution, smoke, dust on property, health impacts.
– **Yandex scooters example (negative externality):**
– Scooter market creates dangers/costs on sidewalks for pedestrians and others not part of the transaction.
– **Positive externality discussion:**
– Instructor acknowledged positive externalities exist.
– Example offered: riding a bus without paying (controversial framing)—benefit enjoyed by a person outside the “paid ridershipâ€� transaction.
– Main takeaway: externalities can be positive or negative; the class will mainly focus on negative ones when diagnosing failures that justify intervention.
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### 6) Internal Market Failures (Three types) + How they map to solutions
The instructor listed and then worked through:
1. **Asymmetry of information**
2. **Lack of volunteerism** (limited/no choice; coercive markets)
3. **(Bounded) rationality** (people do not act like perfect calculators)
#### 6.1) Asymmetry of Information
– **Definition:** One party lacks sufficient information to make an informed valuation/decision.
– **Student-provided example (affirmed):** Used car market (“lemonsâ€�)
– Seller knows true condition and history (maintenance, treatment).
– Buyer cannot realistically access full history.
– Creates mispricing and exploitation potential.
– **Instructor examples:**
– **Milk labeling scenario:** without a production/expiration date, buyers can’t judge freshness; producers/retailers know more.
– **Counterfeit luxury goods:** high-quality replicas sold at authentic prices when buyers cannot distinguish real vs fake (example described from a Bishkek shop selling replica luxury items at original-brand pricing).
**Solution logic emphasized:**
If the diagnosis is information asymmetry → the fix is to **make information symmetrical** (e.g., labeling requirements; enforcement/penalties for mislabeling).
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#### 6.2) Lack of Volunteerism (No real choice in the market)
– **Definition built in class:** Markets rely on choice; when consumers/workers have no meaningful alternatives, they can be forced into bad options.
– **Key characteristics:**
– Especially problematic when the product/service is a **necessity**.
– Can apply to consumer markets *and* labor markets.
**Examples discussed:**
– **Electricity/power market:** often only one provider (natural monopoly or government-supported), leaving households unable to “switch providers.â€�
– **Insurance (health insurance) example:**
– In some places you must have it; limited providers; uniformly high cost.
– The “mandatoryâ€� nature + limited competition reduces voluntarism.
– **Labor market example (West Virginia coal town / North Dakota oil):**
– If only one employer/industry dominates, workers can be coerced into accepting low wages/bad conditions because there’s nowhere else to sell labor.
**Solution logic emphasized:**
If the diagnosis is lack of volunteerism → the fix is to **increase choice/options** (increase competition, broaden access, ensure people know alternatives, reduce coercive market structure).
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#### 6.3) (Bounded) Rationality
– **Conceptual point:** Traditional economics assumes people rationally calculate best options; real life includes limited time, energy, attention, and sometimes different priorities than efficiency.
– **Illustrative example (instructor):**
– Grocery store price hikes with discounts hidden behind an app.
– Store argues there are discounts; rationality failure argument is that consumers can’t constantly invest time/effort to optimize (bounded rationality).
– **Student example: NFTs**
– Discussion framed NFTs as potentially irrational overvaluation (speculation, hype).
– Instructor emphasized that many buyers reasonably should have expected values not to hold (e.g., “it’s just a JPEG/file/linkâ€�); those who bought and held were harmed when the market collapsed.
**Solution logic suggested (high-level):**
– For rationality-related failures: policy often involves **consumer protection, information/education**, or redesigning exploitative processes—though instructor noted rationality issues sometimes overlap with information or voluntarism problems.
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### 7) Pulling it Together: Why Diagnosis Matters (because solutions depend on mechanism)
– Instructor explicitly tied diagnosis to prescriptions:
– Information asymmetry → labeling/standardization/enforcement.
– Volunteerism problem → expand options/competition and access.
– Rationality problem → address behavioral limits/constraints (reduce friction, prevent exploitation, inform).
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### 8) Midterm Exam: Format, Materials, and What Students Must Produce
– **Exam materials:**
– Two papers on each desk:
1. **Instructions**
2. **Case dossier** (case study with data about a real unresolved problem)
– **What the dossier will include:**
– Multiple **grievances** related to one broader problem.
– **What students must do (core tasks):**
1. **Sort each grievance** into:
– Condition **or**
– Policy problem
– Provide a **methodical argument** for classification.
2. For those deemed **policy problems**, **diagnose why they persist**:
– External vs internal market failure
– If internal: specify mechanism (information asymmetry / volunteerism / rationality)
– **Grading emphasis:**
– Not about a single objectively “rightâ€� label.
– Points depend on **argument quality, structure, and methodological reasoning**.
– **Clarification about what is NOT required:**
– Students do **not** need to identify “which stage it failsâ€� in the **policy cycle** for the midterm.
– Instructor said policy-cycle evaluation is coming **after the midterm** when the class begins analyzing real policies in more depth.
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### 9) In-Class Practice Activity (Final activity): Group Work—Find a New Grievance + Policy Link
– **Group structure:** Groups of three (one group of four allowed).
– **Task instructions (criteria):**
– Identify a **new real-world grievance** (not previously used in class).
– **Prohibited repeats:** no Yandex scooters, no Bishkek smog/air pollution, no traffic (and similar previously-used examples).
– Should ideally affect **multiple parts of the world** (not hyper-local only).
– Must have **at least one policy attached** to it (existing policy response or proposed policy).
– **Timing note:** Instructor gave students about a minute to settle on the grievance (transcript ends during repeated “listen to meâ€� audio artifacts, so outcomes of group work were not captured).
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## Actionable Items (Short bullet points, organized by urgency)
### High Urgency (Midterm next week)
– Clarify and confirm **exact midterm date/time** (transcript contains “next Friday, next Thursdayâ€� ambiguity).
– Provide students (via LMS or group chat) a **clean checklist** of what to study for the midterm:
– grievance definition
– condition vs policy problem (responsibility logic + reasons + change over time)
– market failures: externalities; internal (information asymmetry, volunteerism, rationality)
– “solution follows diagnosisâ€� principle (at least conceptually)
– Consider distributing a **one-page template** students can use on the exam:
– Grievance → Condition/Policy Problem + justification
– If Policy Problem → External/Internal → mechanism → brief solution direction
### Medium Urgency (Next class / continuation of activity)
– Follow up on the **group grievance activity**:
– Have each group report their grievance and the associated policy.
– Practice the full sorting/diagnosis on 1–2 selected group examples as a class to mirror midterm conditions.
– Decide whether to address the “tipsâ€� market question later (student raised it; instructor deferred).
### Lower Urgency (Post-midterm course planning)
– Transition plan reminder: after the midterm, shift from grievance sorting/diagnosis to **policy-cycle and real policy evaluation** (students were told this is the next unit).
– Keep note that **final assignment** will reintroduce take-home writing (policy memo/analysis format), since midterm is in-class and AI concerns were a stated reason for format shift.
Homework Instructions:
NO HOMEWORK — The lesson discusses preparing for the upcoming midterm and then assigns an **in-class** group activity (“let’s begin then with our next and final activity for the day… let’s say, groups of three… find, in the real world, a grievance…�) but nowhere includes instructions to complete or submit anything **outside of class** (no take-home task, deadline, or submission requirement is stated).