Public value and principles of good governance 3.

3. Interpreting principles

3.1 Introduction

On the surface, principles can seem straightforward and self-explanatory, but with a closer look, the underlying concepts are often more sophisticated, and can be interpreted differently over time. Take for example the notion of ‘inclusiveness’, which was once understood as public administrations ‘involving’ citizens by providing information, then by opening up feedback channels through consultation so the public could have a voice (not just a vote), and has since evolved to more dynamic forms of interaction and citizens’ active engagement.

The necessity to interpret principles can be illustrated by the three Es: equity, efficiency and effectiveness. Each tends to be common to public administrations across the EU in many fields, and each needs a deeper dive to understand how it must be put into context before being applied. Moreover, there are both connections between principles that make them inter-dependent and sometimes contradictions that create tie-ins and require trade-offs to make the right choice and resolve dilemmas.

3.2. The principle of equity

In the public sphere, ‘equity’ as a core principle is typically applied to accessing, distributing or regulating services (e.g. education, healthcare, social housing), objects (e.g. consumables, equipment, buildings), and money (e.g. grants, taxes, charges) to citizens. Equity is a flexible concept that can govern entitlements (e.g. receiving welfare), obligations (e.g. paying social insurance) and opportunities (e.g. studying at university). It relates to the design of policies, strategies, legislation and regulations, as well as the actual interactions with individuals, businesses and other organisations, including participatory processes.

Equity is linked to ‘fairness’ and ‘equal treatment’. At first sight, these are easy notions to understand. The reality is more complicated, however, as can be seen in the two classic statements

• treat everyone the same - means giving everyone the same rights, the same opportunities, regardless of their circumstances
• give everyone what they need to succeed - seeks to adjust the differences between members of the target community in their ability to access the opportunities or exercise their rights, so that they have an equal outcome.

These nuances in equal treatment require public officials, whether policymakers, law drafters, or service providers, to be aware of the choices they make and be conscious of the consequences. The challenge is to mitigate the inequities and maximise public value in the intervention’s design and delivery.

• First, one needs to be clear about what to apply the principle of equity to. In the path to creating public value (e.g. ‘reducing rural poverty’), equity can be applied to the desired results (e.g. ‘increasing mobility of rural communities’) or to possible tools (e.g. ’offering free bus passes to village residents’). If the focus is results, this might lead to a different conclusion about the most equitable tools. If the focus is tools, the next questions are who and how.
• Second, who is the ‘everyone’ when applying the principle of equity to a policy, law, service, object or funding. Which community is the target? It could be the entire population (within defined geo-political boundaries, such as a town, region or country), a particular ‘user’ category (e.g. patients, students, welfare recipients, pensioners), or a specific social group (e.g. pre-school children, women, retirees, ethnic minorities)? Equity comes into play both within the chosen target community and with others who are not selected (for example, if the proposed tool is ‘offering free bus passes to pensioners’ compared with ‘to all rural residents’).
• The final question is how: making the design and implementation of the desired results and chosen tools as equitable as possible to create public value, taking account of the target community’s circumstances, needs and merits. Policies, laws and processes can contain explicit or implicit biases that favour some citizens over others, especially when resource constraints force choices (unless all who apply are guaranteed to succeed, such as a compensation scheme). In the above example of ‘free bus passes’, this would be a factor if the population of pensioners exceeds the number of passes the municipality can afford. Moreover, policies, laws, services etc. need to factor in behavioural traits (responses, incentives, etc) to the application of the equity principle.

Take the example of access to compulsory education, typically up to the age of 14 or 16. This is the right of every child to receive education, so the ‘what’ is pre-determined in policy and law, and ‘who’ also appears to be clear, leaving just the ‘how’ - but addressing ‘how’ re-opens questions of ‘who’. The first problem to face is that, in any area and at any time, there is only a fixed number of school places within a reasonable distance, so what happens when demand exceeds capacity? In this example, the options may include the following.

• First come, first served. Parents make applications for their children to the preferred school, and the children are enrolled in the order of application. This appears to give equal chances to all children, but it depends on the process. If the application is online, this might penalise those unable to access the internet or complete the form.
• The lottery system. Parents submit applications and children are chosen randomly. Each child has an equal chance of being selected. Again, this depends in part on the process and the parent. As with ‘first come, first served’, it is likely to lead to mixed ability classes, which might be the desired outcome.
• Catchment areas. Children are assigned to the nearest school based on their home address. This appears to be equitable on face value, and also means that siblings can attend the same school. However, it removes choice from the parents (unless the home is equidistant from two schools). Moreover, it can have unintended consequences, as families will compete for housing closest to their preferred schools, pushing up the price of accommodation, meaning that access to education will be determined by the income(s) / wealth of the parent(s), and teachers will compete to work in more affluent areas with fewer socio-economic challenges (if they can afford to live or travel there).
• Rewarding the ‘strongest’ candidates. To be accepted at the nearest / preferred school, each child must take a test and those with the highest scores are selected until capacity is reached. This appears to reward merit, but is it the role of statutory education to help ‘the best’ to get better? What about the rest and what about need? Is a one-off examination a good way to assess merit? What if the child is having a ‘bad day’ due to illness or other reasons? For younger children in particular, the test outcome can vary according to when they were born (e.g. June vs. September) and hence their learning ‘age’ at the time of the test for the following school year.
• Positive discrimination. This is the classic solution to address the substance of differences in situation and circumstance. Equity could be interpreted in respect to social outcomes, so that a certain percentage of school places is reserved for children from disadvantaged backgrounds, for example due to parental low income or membership of a minority ethnic group. Alternatives might include the opportunity for these groups to apply for scholarships, or even the weighting of test results, to address societal inequity. Are these solutions equitable?
• Preserving the family unit. Some entry systems emphasise ensuring that siblings can attend the same school, so younger children gain automatic access if an older child is already in situ. Whether this can be considered equitable is debatable, but it represents a mindset that it is ‘fairer’ to the family if the siblings can support each other and the costs of transporting the children at the start and end of each school day are reduced.

The abovementioned ways to interpret equity constitute only some of the ways to address a fairer distribution than equal apportionment of a good or service.^[1] Each scenario has its interpretation of equity, and its pros and cons.

Furthermore, all equity dimensions cannot be achieved simultaneously. They require trade-offs. For instance, ‘lottery' versus ‘first come, first served’ operates under different logic. The ranking order to access the service is based on different elements (agility to be first versus luck to be chosen). Furthermore, accessing a preferred school regardless of merit might disincentivise children to perform, given that anyone can secure a spot in the school without considering how much effort they put into it. Achieving an equitable distribution is an aspiration that everyone would sign up to; yet the intricacy of the concept requires a debate when translating the principle into workable policies and services.

Finally, whichever selection criteria and process we choose today (including other options), we must acknowledge the dynamics in the context that also apply to the example. First, there are demographic factors, due to fluctuating birth rates (which can be anticipated by the time children reach school-age), and less predictably, population movements. So the system must be suitably designed to apply to both a ‘stock’ of children already in the area who are joining a school and the ‘flow’ of children who are leaving and arriving in the area. The schools themselves can influence family location, as parents try to find homes near to those schools with good reputations and performance. Second, the capacity of the schools themselves can increase or decrease, most probably with supply of places lagging behind demand. The approach to achieve equity today may need adaptation only a few years later.

3.3. The principle of efficiency

This widely cited principle probably feels more intuitive than ‘equity’, but it can also stimulate debate. Each of us probably has our own sense of what efficiency means. In fact, there are four definitions as follows.^[2]

• Productive efficiency. This is arguably the most common understanding, which can be described as ‘achieving the desired outcome with the least possible resources’. There are two sides to this equation. This version of efficiency combines economy (keeping your costs down) and effectiveness (getting the desired results). Its most common application is to public finance management (value for money) and especially procurement. However, ‘cost’ does not have to refer to spending only, but also taking account of alternative uses, i.e. ‘opportunity cost, which is how the resources might have otherwise been used to achieve better or other results. This suggests that the principle should also consider resources ‘misuse’ or even waste, if the outcomes are not attained, while noting that it is not possible to conceptualise every eventuality and sometimes experimentation has a value in itself.
• Dynamic efficiency. This is not about inputs and outputs; it is about the present and the future. Going back to equity, this concerns the inter-generational equation, and can be interpreted in three ways: each generation takes care of its own requirements; resources should be allocated across generations to achieve balance over time; or resources should be allocated so that each generation has equivalent quality of life. This concept can be applied, for instance, to investing in education and science now to ensure higher public value later, or promoting preventative medicine to reduce long-term morbidities, or tackling child delinquency to reduce adult offending rates and decrease police, court and probation costs and the prison population.
• Distributive efficiency. This focuses on the ‘now’, but returns to the principle of equity and, in this case, the effect on society. If every citizen is treated equally, there is a question of fairness, but also the ability to achieve desired outcomes. For instance, if every parent receives a subsidy for childcare, will each euro have a greater impact on low-income or high-income households? Given poorer households spend proportionally more of their incomes, and yet at the same time have lower earnings, what will be the effect of a tax cut on the economy if the policy goal is to stimulate consumption to emerge from a recession?
• Allocative efficiency. This addresses a different challenge: demand vs. supply. Public administrations typically operate on the supply side of this equation: implementing policy, spending funds, providing services, and delivering justice. They can execute these responsibilities productively, but if there is a deficit in demand, then resources have not been allocated efficiently. For example, the government might decide to construct an airport in a particular location, which happens on time and budget, but if the public chooses to use a more convenient alternative, then supply has overridden demand. The answer here can be citizen engagement to understand expectations and co-create the solution that allocates supply to demand.

While efficiency appears to address the question of ‘how’ to extract the most public value from your resources, each variant poses an additional question, namely: ‘what’ (productive), ‘when’ (dynamic), ‘who’ (distributive), and ‘where’ (allocative). All four dimensions should be factored into decisions, even - and especially - if this requires trade-offs. They cannot all be accommodated with equal weight; one of them will be favoured according to political priorities. For example, increasing university spending per student can negatively impact ‘productive efficiency’ if the number of students who access university remains unchanged in relative terms. However, let us suppose this improves the quality of education substantially. Thus, the students acquire qualities more adapted to the labour market and their contribution to it in the future. In that case, the value of ‘dynamic efficiency’ may increase, and thus the decision to increase unit costs reflects the policymakers’ preference.

Sometimes, the efficiency principle cannot be applied because other non-negotiable principles are at play. Transporting nationals by medical plane from a distant country to treat them for highly contagious diseases and preparing exclusive spaces in the hospital for their treatment would score very low in productive efficiency, and it would not be easy to demonstrate gains in the other three efficiency variants. However, the government cannot subject such a decision to a classic ‘cost-benefit analysis’ because it must protect its citizens from these contingencies, especially if they are in these countries risking their lives for altruistic reasons.

3.4. The principle of effectiveness

Like the previous two Es, effectiveness is regularly referenced by public administrations as a central tenet of how they operate. As with efficiency, however, it can be seen from several perspectives with varying degrees of application according to the nature of the organisation.^[3]

• Acquisition. Public administrations are effective when they obtain the necessary resources to satisfy their obligation to implement policy goals, provide services, and protect citizens from different hazards. Usually, these resources come from taxes (reflecting economic and employment activity, inter alia), excise (reflecting trade activity), fees and charges (reflecting demand for services), and borrowings (reflecting creditworthiness). For instance, authorities need to effectively collect taxes from citizens and economic activity, charge users for some services (e.g. sports centres, parking facilities), and access financial markets to invest in infrastructure.
• Achievement. The most common way of understanding effectiveness is to focus on the products (services) of the public administration’s actions through its activities, such as removing household waste, solving crimes, or educating children so they pass examinations.
• Satisfaction. Citizens, businesses and other organisations are likely to judge effectiveness at least partly by the extent to which they are satisfied with policy outcomes and services received, for example, not only if the service is provided but how easy and quick it is to obtain it. This way of evaluating the result of the public administration’s action reflects both perceptions and expectations (whether they have been met or even exceeded), and goes beyond the raw metrics of waste collected, crimes prosecuted and certificates issued.
• Impact. Public administration work (acquisition of resources, achieving certain results and the public’s satisfaction with them) should ultimately culminate in a positive change, combined with other factors and forces beyond the direct control or influence of the public administration. This can comprise notions at the individual and collective level, such as greater prosperity, better quality of life and prospects, a more hopeful future for the planet, and a more cohesive, safe and peaceful society.

These four dimensions pose different challenges, including which should be the focus when anticipating the effectiveness of possible interventions and assessing them ex post. Acquisition and achievement are typically quantifiable and thus can be measured objectively. Satisfaction is qualitative and subjective, while impact raises questions of attribution (cause and effect). The implication is that the answer to the question ‘are we effective?’ is not straightforward.

There are also trade-offs involved in how to be effective. A hospital can be effective in reducing the waiting time to see a specialist. Yet, certain patient groups might feel dissatisfied because effectiveness might mean a strict time duration of a visit (10 minutes or so). This time limit might not be adapted to groups of people who are less articulate, have complex health issues or do not speak the official language adequately. Achievement and satisfaction as yardsticks of effectiveness are traded off.

3.5. Tie-ins and trade-offs across principles

Many principles are tied to each other and inter-dependent. For example, ‘accountability’ demands ‘transparency’. Sometimes they are connected explicitly - for example, some administrations have ‘open and accountable’ as a single principle and/or ‘user-centric and responsive’.

Sometimes, principles can be in opposition to each other, and must be resolved by deferring to the ‘higher’ principle. For example, transparency drives information disclosure, but protecting the citizens' right to privacy (confidentiality) may give grounds for withholding it. Taking another example from primary healthcare, general practitioners need to manage their caseload, and may even have targets for average consultation time per patient (efficiency), but insufficient time for diagnosis can jeopardise clinical judgement (effectiveness).

There can be different permutations and language to convey what is important to applying the principles – the jargon is a lot less significant than the underlying concepts they embody. Most important of all is translating them into the real experience of citizens, businesses and other beneficiaries of public policy and services.

Returning to the example of school places, if a dominant principle is economy, then the decision regarding equity is likely to favour the lowest cost option. As some scenarios require more effort than others, such as preparing and processing a test, then an ‘economy-driven’ solution is more likely to favour a ‘first come, first served’ or ‘catchment area’ approach. Consider also the principle of transparency. Which of these options is the most open to scrutiny by those directly affected (parents and children) and the wider public (including future users)? And how should transparency be interpreted? Publish the results of the tests? Put the positive discrimination criteria online? Disseminate a map of the catchment areas, so parents can seek out the ‘best’ accommodation at an affordable price? The public administration might wish to constrain openness in the interests of a further principle: community cohesion.

To use another example at the organisational level, the pursuit of ‘efficiency’ in public administration can discourage ‘innovation’ by incentivising officials to be risk averse; ‘openness’ in government is a principle adopted by many administrations, but the pursuit of ‘transparency’ must balance freedom of information against the principle and right of ‘confidentiality’ (data privacy), and the realities of ‘effective’ policy advice in government (see below).

Reconciling such dilemmas requires clarity about the principles themselves, but also a framework of guidance, training and above all leadership that recognises such tensions can arise, and that ultimately principles must be interpreted to be applied.

Footnotes

• [1] Stone, D.A. (2012), Policy paradox: The art of political decision making, WW Norton & Company. ⬆
• [2] Based on Andrews, R., and Entwistle, T. (2013), ‘Four Faces of Public Service Efficiency: What, How, When and For Whom to Produce’. February 2013, Public Management Review 15(2), and Andrews, R. and Entwistle, T. (2014), Public Service Efficiency Reframing the Debate, Routledge Critical Studies in Public Management. ⬆
• [3] Expanding on classification from Kushner, R.J., and Poole, P.P (1996), ‘Exploring structure-effectiveness relationships in nonprofit arts organizations’, Nonprofit Management & Leadership, Volume 7, Issue 2, Winter 1996, 119-136. ⬆