Public policymaking is often viewed as a conveyor belt in which issues are first recognized as a problem, alternative courses of action are considered, and policies are adopted, implemented by agency personnel, evaluated, changed, and finally terminated on the basis of their success of lack thereof. To clearly understand how public problems flow through the policy cycle to become laws, one must consider the six stages of the policy cycle: agenda setting, policy formulation, policy implementation, policy evaluation, policy change, and policy termination. As with any problem-solving initiative, to start the cycle, one must identify the problem.
The year was 2001. In the wake of devastating corporate accounting scandals by Enron and WorldCom resulting in thousands of citizens losing their entire life savings, public outcry demanded government intervention. These scandals, which cost investors billions when the share prices of the affected companies collapsed, shook public confidence in the nations' securities markets. This is referred to as the policy problem. In order for the government to create a public policy on some matter, a problem must be recognized by governmental officials and such officials must also choose to solve that specific concern. Next, a policy problem is placed onto the agenda and a policy response is determined by how the concern is defined. Thus, agenda setting involves getting an issue recognized. Agenda setting can be defined as "the list of subjects or problems to which government officials…are paying some serious attention at any given time". In the case of Enron and WorldCom, the problem was placed on institutional agenda for active and serious consideration by decis ...