Three orders of policy change
Hall (1993) distinguished three orders of change. First-order change adjusts the settings of instruments, such as interest rate levels, and second-order change introduces new instruments. Third-order change is a paradigm shift in which goals and problem definitions themselves change. First- and second-order changes occur routinely through 'social learning' led by officials and experts, while third-order change happens when anomalies inexplicable by the existing paradigm accumulate and a contest over political authority ensues. This applies the logic of Kuhn's paradigm shifts to policy.
From Keynesianism to monetarism
Hall argued that when anomalies such as stagflation could not be explained by Keynesianism in 1970s Britain, the media, financial sector and Conservative politicians championed monetarism in a contest over authority. With the Thatcher government in 1979, a third-order change shifted the policy goal from reducing unemployment to price stability. Earlier, Hall (1989) compared how Keynesianism was adopted differently across countries, and Berman (1998) showed how ideas shaped social democratic party strategies in interwar Europe.
Critiques and extensions
Blyth (2013) noted that the neoliberal paradigm survived even the major anomaly of the 2008 financial crisis, questioning the assumption that crises lead to shifts. Baumgartner (2013) argued that ideational change can also be incremental, linking it to punctuated equilibrium, and Carstensen (2011) argued that 'bricolage', in which actors combine multiple ideas, is more realistic than coherent paradigms. The concept is used alongside belief systems in the advocacy coalition framework and ideational work in historical institutionalism.
FAQ
- What is a policy paradigm in simple terms?
- It is the shared mental framework that policymakers take for granted about what the problem is, what the goals are and which tools to use.
- When does third-order change happen?
- When problems the old thinking cannot explain pile up and groups championing new ideas gain political authority.
Sources reviewed: 2026-10-26
References
- Hall, P. A. (1993). Policy paradigms, social learning, and the state: The case of economic policymaking in Britain. Comparative Politics, 25(3), 275–296. The founding article.
- Hall, P. A. (Ed.). (1989). The political power of economic ideas: Keynesianism across nations. Princeton University Press. Keynesianism across nations.
- Kuhn, T. S. (1962). The structure of scientific revolutions. University of Chicago Press. Origin of the paradigm idea.
- Blyth, M. (2013). Paradigms and paradox: The politics of economic ideas in two moments of crisis. Governance, 26(2), 197–215. Crisis without shift.
- Baumgartner, F. R. (2013). Ideas and policy change. Governance, 26(2), 239–258. Ideas and change.
- Carstensen, M. B. (2011). Paradigm man vs. the bricoleur: Bricolage as an alternative vision of agency in ideational change. European Political Science Review, 3(1), 147–167. Bricolage alternative.
- Berman, S. (1998). The social democratic moment: Ideas and politics in the making of interwar Europe. Harvard University Press. Ideas in interwar Europe.