Benefit Reform a Dynamic Microsimulation Approach Using Administrative Data

1
Benefit Reform a Dynamic Microsimulation
Approach Using Administrative Data

• Simon Gault
• Model Development Unit
• Strategy Directorate, DWP, UK
• IMA June 2009

2
Overview

• Background
• Administrative data
• Description of INFORM
• Policy change example
• Conclusions

3
Background

• Department for Work and Pensions
• 140 bn per year on benefit payments
• Around half on working age
• Aggregate Microsimulation forecasting
  models
• Genesis

• INtegrated FORecasting Model
• Benefit interactions

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Administrative Data
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DWP administrative Data

Available used Multi Benefit Longitudinal
(1999-) Potential expansion
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INFORM processes
Monthly cycle
NO
NO
MORTALITY ?
PENSION AGE ?
Benefit 1
AGEING
Benefit 2
YES
YES
DATA (1 SAMPLE) LIVE EPISODES AND LIVE WITHIN
PAST FIVE YEARS
EXIT MODEL
OVER 5 YEARS
NEW INFLOWS
DORMANT
Benefit n
DATA CLONES
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Key features

• Genesis interface
• Benefit interactions / history
• Transition equations
• Alignment
• Standardised outputs
• Compatible outputs

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Major policy change
Incapacity Benefit (IB) - for unable to work
because of illness or disability, usually
requiring sufficient national insurance
contributions to qualify.
Employment and support allowance (ESA)
Income support (IS) - means-tested intended to
provide for basic living expenses, on its own or
top up other benefits. For sick / disabled
replaced by means tested ESA.
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Key issues

• No data !
• Retain historic analysis / equations
• Replace TWO benefits
• Imposing assumptions ?

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Solutions

• Use IB data and analysis
• Clone cases
• Re-use equations
• Ghost of IS
• Align exits
• Align to change
• Severity proxies

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Conclusions

• Genesis architecture critical
• Importance of by-products
• Know the data
• Start simple
• Standardise simplify
• Fit for purpose

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• Any Questions?