Improving Information for Social Policy Decisions -- The Uses of Microsimulation Modeling Volume I, Review and Recommendations (1991) / Chapter Skim
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2 The Search for Useful Information
2 The Search for Useful Information
Pages 33-51
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From page 33... ...
Congress added questions on age and sex to the 1790 census schedule, and, by the time of the Civil War, the questionnaire included items on citizenship, education, disability, marital status, place of birth, industry, occupation, and value of real estate owned (Bureau of the Census, 1970:4~. Information about industrial practices and their effects on the population that was gathered by the great "muckraking" journalists at the turn of the century, including Ray Stannard Baker, Upton Sinclair, Lincoln Steffens, and Ida Tarbell, 1 Studies on the role of policy information and policy analysis in public decision making, particularly on the part of the Congress, include Bulmer (1986, 1987)
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From page 34... ...
In turn, the activist posture of the federal government with regard to social welfare policies Medicare, the expansion of social security coverage and benefits, and the Supplemental Security Income program for the low-income elderly and disabled are only a few examples of the legislative initiatives of that period—both stimulated the production of policy research and analysis and drew on its results. Today, policy information plays a much greater role at every stage of the political process than ever before in U.S.
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From page 35... ...
Through their facility for repeated application within a consistent, documented framework, they can earn a return on investment in their development, serve as a vehicle for identifying important data and research gaps, and contribute to a cumulative body of knowledge relevant to social welfare policy formulation, as well as the development of improved models. However, in practice, formal models may be inadequate to the task if, for instance, they do not reflect relevant data or research findings or cannot readily be altered in a timely manner to respond to the changing course of a policy debate.
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From page 36... ...
, charging it to provide Congress with analyses of the federal budgetary cost impact of every piece of legislation reported by a congressional committee. No longer would Congress rely solely on the expertise of executive agency staff; rather, it would obtain independent estimates of legislative proposals originating from the administration or Congress itself.
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From page 37... ...
Yet even as budgets remained tight, the pressure to produce estimates for legislative initiatives remained strong. Indeed, the pressure increased in the mid-1980s with the introduction on the legislative agenda of such explosive and complex issues as tax and welfare reform and the passage of the Gramm-Rudman-Hollings Act, calling for strict deficit reduction measures and
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From page 38... ...
We also provide a case study of the advantages and disadvantages of microsimulation models in comparison with other analysis tools for shaping social welfare legislation that identifies some of the problems most in need of attention. POLICY ANALYSIS: BETWEEN SOCIAL SCIENCE RESEARCH AND POLITICS Hanushek (1990:147-148)
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From page 39... ...
Heavy time pressures also constrain the analysts who are involved in producing policy information. They often lack the time to do as thorough
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From page 40... ...
Yet we believe that it is completely unfounded to reach the cynical conclusion that policy information is only window dressing for the political process. There is ample evidence that decision makers seek information to help them make good policy choices in the presence of uncertainty; indeed, the role of information in shaping policy has increased enormously in the recent past.
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From page 41... ...
A CASE STUDY OF POLICY ANALYSIS: THE FA1\IILY SUPPORT ACT OF 1988 The policy analysts at work today, both congressional or executive agency staff and employees of contract research fimns, have a variety of data sources and estimating tools to call on in responding to the needs of decision makers for information about alternative legislative proposals. In this section we illustrate some of the capabilities and limitations of microsimulation models vis-a-vis other approaches for policy analysis through considering how they were and might have been used in the legislative process that culminated in the Family Support Act of 1988.4The Family Support Act (FSA)
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From page 42... ...
The analysts developed the needed estimates using several different formal models together with their own specially tailored calculations. (It is not unusual for policy analysts to use different techniques, for example, to produce estimates of costs as distinct from distributional effects or to handle different provisions of a legislative package; the very disparate provisions of the FSA virtually dictated such an eclectic approach.)
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From page 43... ...
A key issue is the advantages and disadvantages of using microsimulation modeling rather than more aggregate techniques to estimate the total added costs of this proposal and the number of added beneficiaries. Considering the roughest, most global approach first, an analyst could elect to prepare overall estimates on a calculator or personal computer as follows: from current published administrative data for the AE;DC program, compute the ratio of the unemployed-parent caseload (benefits)
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From page 44... ...
Participation rates for many income support programs are well below 100 percent: they are currently estimated at about 77 percent of eligible families for the basic AFDC program (Ruggles and Michel, 1987:34) , even lower for the AFDC unemployedparent program, and at about 60 percent of eligible households for food stamps (Doyle, 1990:12~.
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From page 45... ...
Moreover, because the major models for AFDC also include modules for other related income support programs, such as supplemental security income and food stamps, they are well equipped to trace through program interactions in a consistent framework. In fact, both CBO and ASPE staff relied largely on the TRIM2 microsimulation model (Transfer Income Model 2; see Appendix to Part II)
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From page 46... ...
Like the TRIM2 class of income-support program models, benefit calculators for programs such as AFOC operate at the level of the individual assistance unit, mimic the program rules for determining benefit amounts, and take account of some joint program interactions, such as those between AFDC and food stamps. Because they look only at administrative data for current beneficiaries, they are smaller, less expensive, and much easier to use than the TRIM2-type models that simulate the entire population.
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From page 47... ...
The available income-support microsimulation models are cross-sectional in nature, designed to produce a snapshot of the caseload in a particular month or on an average monthly basis for a given year. They are not oriented to the type of longitudinal analysis required to assess the effects of providing extended child care and Medicaid benefits to ALEC families who increase their earnings sufficiently to become ineligible for basic benefits.6 ASPE analysts initially used TRIM2 to produce estimates of the characteristics of those eligible for transitional benefits to feed into their spreadsheet models.
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From page 48... ...
Once the debate was under way in early 1987, there was no time to invest in making substantial modifications to the current income-support microsimulation models to handle the child support, jobs program, or transitional assistance provisions of the FSA. The COO and ASPE analysts developed their own specially tailored models to accomplish the task of producing policy impact estimates for those important components of the FSA.8 Problems in the Estimation Process In briefly reviewing the FSA cost~stimation process, we noted policy areas for which microsimulation modeling could have been appropriate but for which suitable models and databases were not available.
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From page 49... ...
Models such as TRIM2 include a static aging capability but its use to develop aged databases has historically been a complex, expensive, and timeconsuming task and it may distort relationships among key variables, given the inevitable limitations of the available projections. The usual practice of CBO and ASPE analysts and the FSA estimates were no exception has been to use TRIM2 to develop estimates of percentage differences in the costs and caseloads of current versus proposed provisions for income support programs using the latest available database (typically the March CPS for the preceding year)
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From page 50... ...
For example, the transitional Medicaid and child care provisions of the FSA could well reduce the rate of reenrollment in the AFDC program. The child support enforcement provisions over the long term could well alter such basic behaviors as fertility and divorce.
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From page 51... ...
Validation admittedly is a daunting task, particularly for large, complex models such as the current income-support program microsimulation models. However, as we stress throughout the report, validation is one of the most important tasks to undertake if there is to be adequate information on which to base improvements to modeling tools and data sources that can lead to improved information for future policy debates.
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