A meso-level empirical validation approach for agent-based computational economic models drawing on micro-data: a use case with a mobility mode-choice model

The complex nature of agent-based modeling may reveal more descriptive accuracy than analytical tractability. That leads to an additional layer of methodological issues regarding empirical validation, which is an ongoing challenge. This paper offers a replicable method to empirically validate agent-based models, a specific indicator of “goodness-of-validation” and its statistical distribution, leading to a statistical test in some way comparable to the p value. The method involves an unsupervised machine learning algorithm hinging on cluster analysis. It clusters the ex-post behavior of real and artificial individuals to create meso-level behavioral patterns. By comparing the balanced composition of real and artificial agents among clusters, it produces a validation score in [0, 1] which can be judged thanks to its statistical distribution. In synthesis, it is argued that an agent-based model can be initialized at the micro-level, calibrated at the macro-level, and validated at the meso-level with the same data set. As a case study, we build and use a mobility mode-choice model by configuring an agent-based simulation platform called BedDeM. We cluster the choice behavior of real and artificial individuals with the same ex-ante given characteristics. We analyze these clusters’ similarity to understand whether the model-generated data contain observationally equivalent behavioral patterns as the real data. The model is validated with a specific score of 0.27, which is better than about 95% of all possible scores that the indicator can produce. By drawing lessons from this example, we provide advice for researchers to validate their models if they have access to micro-data

People-centric policies for decarbonization: Testing psycho-socio-economic approaches by an agent-based model of heterogeneous mobility demand

Decarbonization has become a crucial issue for all countries in the world, which have varied targets and strategies to deal with it, especially after the Paris Agreement. Around one-fifth of global carbon-dioxide emissions is originated from the transportation sector. Policy changes and new regulations are planned to reduce such emissions e.g. by reducing the use of fossil-fuel private cars. For railways, supply-side policies involving large scale and long-term investment have dominated the debate. In this paper, we focus on people-centric policies that could be, in principle, faster and less expensive. To test the potential success of mobilizing demand for low carbon solutions, we have been developing an agent-based computational economics (ACE) model for many modal choices (including railway, bikes, private cars, etc.). It contains a large number of agents, with realistic operative parameters, environment, and infrastructure, reflecting in this study the Swiss system. In this paper, we focus on the railway system. A description of the Swiss world-class railway system is presented and the dynamics in the model, covering the demand for railway mobility as derived from psycho-social-economic approaches, are explored. Innovations in preferences, emotional attitudes and innovative swaps in non-technological resource shift the simulated use of the railway system. Carbon-dioxide direct emission levels are computed. Dynamic and heterogeneous demands of the agents are investigated along with several scenarios, some of them lead to significant decarbonization. We argue, after the simulation results, that railway demand increase can contribute to decarbonization strategies, including those possibly included in the next wave of Nationally Determined Contributions under the Paris Agreement. However, total decarbonization of the transport system will need to embrace further modes, such as e-vehicles and non-motorized transport

From remittances to microcredit

In many peripheral countries, remittances are becoming an extremely important source of external financial flows. In spite of their several desirable effects (e.g. structural growth, stability over time, direct positive impact on poor and middle-income families, etc.), remittances are hardly used for investment and productive purposes; rather they tend to prompt temporary consumption and even imports, exacerbating the trade deficit. In this paper, it is investigated how Microcredit Financial Institutions (MFIs) could connect to remittances flows, so as to boost self-reliance and entrepreneurship, thereby contributing to poverty reduction and widely shared economic growth. A policy trying to channel remittances to microcredit is evaluated in terms of its differentiated appeal for different kinds of migrants. A world-wide analysis of remittances and microcredit diffusion is mapped into a graph of the hierarchical structure of the world, based on previous original works on core, peripheral, semi-peripheral, and independent countries. The results show that remittances significantly deviate from the pattern of both trade revenues and foreign direct investments. Remittances are shaking the world structure by arriving where the others do not. Quite similarly, the number of MFIs is higher the lower the ranking in the world hierarchy. In particular, the exceptional position of Bangladesh in both remittances and microcredit is paralleled by its almost unique position in the world hierarchy. In microeconomic terms, remittances are characterized by asymmetric information and moral hazard, which reduces their amount and the share sent through official channels. MFIs could boost overall remittances and take a share in them by offering innovative quadrilateral relations to remittance sender, remittance receiver, micro-loan borrower. Indeed, there is a high level of compatibility between microcredit and remittances mechanisms in terms of the people involved, the centrality of private initiative, the dimension of the transaction, the time horizon. In particular, there exists a small but growing sub-group of emigrants that could devote significant sums to fund MFIs in the perspective of receiving back the capital with interests when they come back (or go) to the developing country. The legal, risk-bound, competitor-driven problems of the proposed mechanism of connection are given remedies and an outline of time-path for implementation. In macroeconomic terms, the wider and more flexible aggregate supply due to the private entrepreneurial activities funded by MFIs would increase the potential GDP and would improve the working of the Keynesian multiplier triggered by remittances, thus reducing inflationary tensions and trade unbalances. A more equilibrated and fairer growth path can then be attained. The countries where this proposed policy has the largest potential for success might include not only India, Bangladesh, Viet Nam, Indonesia, Thailand and Sri Lanka but also Ethiopia, Nigeria and the Philippines. Among the countries dominated by Germany, Egypt, Morocco, Viet Nam, Colombia and Mexico are particularly well placed to grasp this opportunity, especially if an adequate assistance is offered to them