Microsimulation as an Instrument to Evaluate Economic and Social Programmes

In recent years microsimulation models (MSMs) have been increasingly applied in quantitative analyses of the individual impacts of economic and social programme policies. The suitability of using microsimulation as an instrument to analyze main and side policy impacts at the individual level will be discussed in this paper by characterizing: the general approach and principles of the two general microsimulation approaches: static and dynamic (cross-section and lifecycle) microsimulation, the structure of MSMs with institutional regulations and behavioural response, panel data and behavioural change, deterministic and stochastic microsimulation, the 4M-strategy to combine microtheory, microdata, microestimation and microsimulation, and pinpointing applications and recent developments. To demonstrate the evaluation of economic and social programmes by microsimulation, two examples concerning a dynamic (cross-section and life-cycle) microsimulation of the German retirement pension reform and a combined static/dynamic microsimulation of the recent German tax reform with its behavioural impacts on formal and informal economic activities of private households are briefly described. Evaluating the evaluation of economic and social programmes with microsimulation models finally is followed by concluding remarks about some future developments.microsimulation, evaluation of economic and social-political programms

Microsimulation as an Instrument to Evaluate Economic and Social Programmes

In recent years microsimulation models (MSMs) have been increasingly applied in quantitative analyses of the individual impacts of economic and social programme policies. The suitability of using microsimulation as an instrument to analyze main and side policy impacts at the individual level will be discussed in this paper by characterizing: the general approach and principles of the two general microsimulation approaches: static and dynamic (cross-section and lifecycle) microsimulation, the structure of MSMs with institutional regulations and behavioural response, panel data and behavioural change, deterministic and stochastic microsimulation, the 4M-strategy to combine microtheory, microdata, microestimation and microsimulation, and pinpointing applications and recent developments. To demonstrate the evaluation of economic and social programmes by microsimulation, two examples concerning a dynamic (cross-section and life-cycle) microsimulation of the German retirement pension reform and a combined static/dynamic microsimulation of the recent German tax reform with its behavioural impacts on formal and informal economic activities of private households are briefly described. Evaluating the evaluation of economic and social programmes with microsimulation models finally is followed by concluding remarks about some future developments.microsimulation, evaluation of economic and social-political programms

Microsimulation as a Tool for Evaluating Redistribution Policies

During the last 20 years, microsimulation models have been increasingly applied in qualitative and quantitative analysis of public policies. This paper discusses microsimulation techniques and their theoretical background as a tool for the analysis of public policies. It next analyses basic principles for using microsimulation models and interpreting their results, with emphasis on tax incidence, redistribution and poverty analysis. It then discusses social welfare analysis permitted by microsimulation techniques and points to the limits of present approaches and some directions for future developments.Keywords: Microsimulation; Evaluation of Public Policies; Redistribution; Poverty, Inequality.

The "LifeCourse" model, a competing risk cohort microsimulation model: source code and basic concepts of the generic microsimulation programming language Modgen

This paper documents the source code of “LifeCourse”, a simple competing risk microsimulation model initially developed alongside a study on fertility decline in Bulgaria and Russia. “LifeCourse” is programmed in the generic microsimulation language Modgen developed at Statistics Canada. In the context of this contribution, the model is introduced step by step as template for other microsimulation applications and as training tool for demographic microsimulation using Modgen.microsimulation

Comparison of response surface methodology and the Nelder and Mead simplex method for optimization in microsimulation models

Microsimulation models are increasingly used in the evaluation of cancer screening. Latent parameters of such models can be estimated by optimization of the goodness-of-fit. We compared the efficiency and accuracy of the Response Surface Methodology and the Nelder and Mead Simplex Method for optimization of microsimulation models. To this end, we tested several automated versions of both methods on a small microsimulation model, as well as on a standard set of test functions. With respect to accuracy, Response Surface Methodology performed better in case of optimization of the microsimulation model, whereas the results for the test functions were rather variable. The Nelder and Mead Simplex Method performed more efficiently than Response Surface Methodology, both for the microsimulation model and the test functions.health;simulation;optimization

Estimating the small area effects of austerity measures in the UK

Governments across Europe are starting to implement a range of cost-cutting and income generating programmes in order to re-balance their fiscal budgets following substantial investments in stabilising domestic financial institutions in 2008 and 2009. One method of doing this has been to increase tax rates such as the increase in VAT in the UK from 17.5% to 20% from January 1st 2011. In this paper we explore the different spatial impact of this VAT rise on household expenditure on public and private transport and communication technology from 2006 to 2016. We do this by combining three elements: an agent-based dynamic population microsimulation model that produces projected snapshots of the UK population in 2006, 2011 and 2016; an expenditure system model based on the familiar Quadratic Almost Ideal Demand System approach; and synthetic small area census tables produced by projecting historical UK census data. Taken together these elements provide a toolkit for assessing the potential spatial impact of rising taxes or prices (or both) and we use them to compare small area projections of household expenditure under two scenarios. The first is a 'no intervention' scenario where prices and income align to UK government inflation forecasts and the second is a one-off non-reversed 2.5% increase in VAT on goods and services rated at 17.5% on 1st January 2011. We present results for different areas (rural vs urban/deprived vs affluent) and for different income groups within them and discuss the potential implications for the telecommunications industry and for the usage of public and private transport

WHAT HAS HAPPENED TO REPLACEMENT RATES? ESRI Working Paper No. 76, May 1996

Financial incentives to take up and stay in work, and the impact of the tax and social welfare systems on these incentives, have become a major preoccupation of Irish policy-makers. Recent Budgets have highlighted measures to "reward work" through income tax and PRSI relief for the low paid, and one aim of the expert working group set up to advise on the integration of the tax and social welfare systems is to point towards ways of improving work incentives. Empirical studies of work incentives generally measure the financial incentive facing individuals in the form of replacement rates, the ratio of income when unemployed to income when in work.1 In calculating replacement rates, choices about precisely what is to be included in the numerator or the denominator have to be made and can matter. More fundamentally, though, different approaches to deriving replacement rates, relying on different types of data, can be distinguished and may not tell the same story about the situation at a particular point in time or changes over time. This paper sets out the alternative approaches which have been used to measure Irish replacement rates, compares the pattern they show for these rates over time, and assesses the implications for our picture of how work incentives have evolved and for measurement practice

Using microsimulation feedback for trip adaptation for realistic traffic in Dallas

This paper presents a day-to-day re-routing relaxation approach for traffic simulations. Starting from an initial planset for the routes, the route-based microsimulation is executed. The result of the microsimulation is fed into a re-router, which re-routes a certain percentage of all trips. This approach makes the traffic patterns in the microsimulation much more reasonable. Further, it is shown that the method described in this paper can lead to strong oscillations in the solutions.Comment: Accepted by International Journal of Modern Physics C. Complete postscript version including figures in http://www-transims.tsasa.lanl.gov/research_team/papers

Microsimulation as a tool for evaluating redistribution policies

During the last twenty years, microsimulation models have been increasingly applied in qualitative and quantitative analysis of public policies. This paper provides a discussion on microsimulation techniques and their theoretical background as a tool for the analysis of public policies with particular attention to redistribution and social policies. Basic principles in using microsimulation models and interpreting their results are analyzed, with particular emphasis on tax incidence, redistribution and poverty analysis. Social welfare analysis permitted by microsimulation techniques is also discussed. Finally, the paper points to limits of present approaches and directions for future research.microsimulation ; evaluation of public policies ; optimal taxation ; poverty and inequality

Validating a dynamic population microsimulation model: Recent experience in Australia

Available published research on microsimulation tends to focus on the results of policy simulations rather than upon validation of the models and their outputs. Dynamic population microsimulation models, which age an entire population through time for some decades, create particular validation challenges. This article outlines some of the issues that arise when attempting to validate dynamic population models, including changing behaviour, the need to align results with other aggregate ‘official’ projections, data quality and useability. Drawing on recent experience with the construction of the new Australian Population and Policy Simulation Model (APPSIM), the article discusses the techniques being used to validate this new dynamic population microsimulation model.Dynamic microsimulation, validation, model output, usability