Published Date
1991
Editors
Eric A. Hanushek
Constance F. Citro
Publication
Washington, DC: National Academy Press
Pages
360 pages
Type
This book reviews the uses and abuses of microsimulation models - large, complex models that produce estimates of the effects on program costs and who would gain and who would lose from proposed changes in government policies ranging from health care to welfare to taxes. Volume 1 is designed to guide future investment in modeling and analysis capability on the part of government agencies that produce policy estimates. It will inform congressional and executive decision makers about the strengths and weaknesses of models and estimates and will interest social scientists in the potential of microsimulation techniques for basic and applied research as well as policy uses. The book concludes that a "second revolution" is needed to improve the quality of microsimulation and other policy analysis models and the estimates they produce, with a special emphasis on systematic validation of models and communication of validation results to decision makers.
PANEL TO EVALUATE MICROSIMULATION MODELS FOR SOCIAL WELFARE PROGRAMS
ERIC A. HANUSHEK (Chair), Department of Economics, University of Rochester
DAVID M. BETSON, Department of Economics, University of Notre Dame
LYNNE BILLARD, Department of Statistics, University of Georgia
SHELDON DANZIGER, Institute of Public Policy Studies, University of Michigan
EUGENE P. ERICKSEN, Department of Sociology, Temple University
THOMAS J. ESPENSHADE, Office of Population Research, Princeton University
HARVEY GALPER, KPMG Peat Marwick, Washington, D.C.
LOUIS GORDON, Department of Mathematics, University of Southem Califomia
KEVIN M. HOLLENBECK, W.E. Upjohn Institute for Employment Research, Kalamazoo, Mich.
GORDON H. LEWIS, School of Urban and Public Affairs, Carnegie Mellon University
ROBERT MOFFITT, Department of Economics, Brown University
GAIL R. WILENSKY, Health Care Financing Administration, U.S. Department of Health and Human Services [served until January 1990]
MICHAEL C. WOLFSON, Analyfical Studies Branch, Statistics Canada
CONSTANCE F. CITRO, Study Director
MICHAEL L. COHEN, Consultant
CHRISTINE M. ROSS, Research Associate
AGNES E. GASKIN, Administrative Secretary
CONTENTS
ACKNOWLEDGMENTS
SUMMARY
Improving the Tools of Policy Analysis: Investment Priorities
2
The Role of Microsimulation as a Policy Analysis Tool
8
Recommendations for Improving Policy Analysis
13
Recommendations for Microsimulation Models
15
1
INTRODUCTION
A Scene in Washington, D.C.
21
The Tools of Policy Analysis
24
The Panel Study
26
PART I -- INFORMATION FOR SOCIAL WELFARE POLICY: TOWARD A SECOND REVOLUTION
2
THE SEARCH FOR USEFUL INFORMATION
The First Information Revolution
35
Policy Analysis: Between Social Science Research and Politics
38
A Case Study of Policy Analysis: The Family Support Act of 1988
41
3
IMPROVING THE TOOLS AND USES OF POLICY ANALYSIS
A Strategy for Investment
52
Data Quality and Availability
55
Validation
72
Documentation and Communication of the Results of Policy Analysis
84
APPENDIX: MODELS, UNCERTAINTY, AND CONFIDENCE INTERVALS
Models
89
Uncertainty of an Estimate
90
Conditional Versus Unconditional Confidence Intervals
93
An Illustrative Diagram
95
PART II -- THE ROLE OF MICROSIMULATION AS A POLICY ANALYSIS TOOL4. MICROSIMULATION MODELS: THEN AND NOW
Basic Elements of Microsimulation Models
101
Development of Microsimulation Modeling for Policy Analysis
107
Role and Current Status of Microsimulation: Findings
114
5
DATABASES FOR MICROSIMULATION
Data Quality: The March CPS
125
Strategies for Treating Missing and Erroneous Data, 132 The Promise of SIPP
137
Recommendations for Improving Data Quality, 1396. MODEL
DESIGN AND DEVELOPMENT
Model Design Principles and Practices
155
Current Microsimulation Model Design
161
Strategic Directions for Microsimulation Model Development
164
7
COMPUTING TECHNOLOGY AND MICROSIMULATION
The Evolution of Microsimulation Computing Platforrns
183
New Developments in Computing Technology
185
Future Directions for Computing in Microsimulation
191
8
MICROSIMULATION MODELING OF HEALTH CARE, RETIREMENT INCOME, AND TAX POLICIES
Health Care Policies
195
Retirement Income Policies,
212
Tax Policies, 2199. VALIDATION
Corroboration as a Stand-in for Validation
233
Techniques of Model Validation
235
Review of Validation Studies
241
A Validation Study of TRIM2: The Panel's Experiment
248
Strategies for Validating Microsimulation Models: Recommendations
259
10
DOCUMENTATION AND ARCHIVING
Standards for Model Documentation
266
A Documentation Case Study
268
Recommendations
270
11
THE MICROSIMULATION MODELING COMMUNITY
Relationships Among Federal Agencies
274
Policy Analysis Agencies and Their Suppliers
278
Policy Analysis Agencies and Decision Makers' Staffs
280
The Role of Research
281
APPENDIX: MICROSIMULATION MODELS, DATABASES, AND MODELING TERMS
Models
290
Databases
298
Modeling Terms
302
GLOSSARY OF ACRONYMS
REFERENCES
BIOGRAPHICAL SKETCHES OF PANEL MEMBERS AND STAFF