The Birth of Policy Bubbles: Conceptual Foundations

Abstract

A theory of policy bubbles suggests that academic attention should be directed at the growth of bubbles rather than at their emergence. This argument is conceptually challenged here on the grounds that different processes of bubble emergence may lead to different types of policy bubbles. Drawing primarily on the sociology of valuation, this paper develops a conceptual framework which distinguishes between preference-driven policy bubbles, which emerge as the output of what policy entrepreneurs want in terms of attaching a distorted or biased meaning to a policy, and institution-driven policy bubbles, which emerge as the output of a process wherein policy entrepreneurs are restricted in attaching a distorted meaning to a policy by transparency constrained on the policy domain (e.g., secrecy laws). It is suggested that transparency constraints on the policy domain may lead to stronger and more sustainable distorted policy valuations, and thereby, to relatively stable and self-sustaining policy bubbles. The lack of such constraints may lead to weaker and less sustainable distorted policy valuations and, thereby, to relatively fragile policy bubbles.