Microsimulation in a Cold Climate David Bell University of Stirling.
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Transcript of Microsimulation in a Cold Climate David Bell University of Stirling.
Microsimulation in a Cold ClimateMicrosimulation in a Cold Climate
David BellUniversity of Stirling
OPERAOPERA
Older PEople’s Resource Allocation model
Addresses issues of population ageing
Design has been reactive rather than proactive
Partly due to funding issues
Consequence – coherence? – but closely linked to policy process
2ESRC Microsimulation Seminar Leeds 2nd July 2009
Structure of TalkStructure of Talk
Structure of OPERA
Applications
1. Local Income Tax – Burt Commission
2. Indexation of Social Security Benefits – Finance Committee
3. Modelling Home Care Costs – Audit Scotland
4. Dementia Satellite Model – Alzheimer’s Scotland
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Structure of OPERAStructure of OPERA
Population• UK Households (Private/Non-Private?)• Subsets – region – local authority?
Main datasets• Family Resources Survey
(Boosted sample in Scotland)
• Survey of Personal Incomes
What to do about communal dwellings?
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Structure of OPERAStructure of OPERA
Accounting Relationships• Taxes and Benefits• Non-behavioural
• Home Care• Parameterised from external dataset
• Care Homes• Calibrated from key statistics• More data soon available
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Structure of OPERAStructure of OPERA Software - Stata/Mata
Statistics Distributions Panel Survival Directly integrate estimation results
Graphics Wide range of flexible routines
Choropleth maps• Not currently in Stata Corp release
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Example 1: Local Income TaxExample 1: Local Income Tax
Proposal to replace council tax with local income tax
• Variant 1: uniform rate of local income tax throughout Scotland
• Variant 2: each local authority able to set its own local income tax
What would be the distributional and spatial consequences?
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Distributional EffectsDistributional Effects
ESRC Microsimulation Seminar Leeds 2nd July 2009
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0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1 2 3 4 5 6 7 8 9 10
<-- Poorer Income Decile Richer -->
Per
cen
t o
f N
et H
ou
seh
old
Inco
me
bh
c
3p
4.3p
5.07p
Ctax
Winners and Losers with Local Income TaxWinners and Losers with Local Income Tax
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Costs (% of Disposable Income) of Costs (% of Disposable Income) of Various Local Tax Structures Various Local Tax Structures
ESRC Microsimulation Seminar Leeds 2nd July 2009 11
Example 2 – Projecting Consequences of Example 2 – Projecting Consequences of Indexing Social Security Benefits to PricesIndexing Social Security Benefits to Prices
Rather than transit from Period 1 to Period n in unit time period increments, ignore the dynamics and reweight data based on externally projected control totals.
Disaggregate geographically
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Effect of Continued Price Indexation on Effect of Continued Price Indexation on Household PovertyHousehold Poverty
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Example 3 - Home Care CostsExample 3 - Home Care Costs
Based on Welsh Local Authority SurveyBased on Welsh Local Authority Survey Distribution of
Costs Highly Skewed
40% of clients account for 10% of costs
10% of clients account for 40% of costs
Poses real problems for estimation, simulation
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Modelling Home Care CostsModelling Home Care Costs
Common specification of cost functions• Log cost - log(y) = Xβ + ε•
But E(ln(y)) ≠ ln(E(y))
Unbiased estimates of y difficult if ε is heteroscedastic in x
If ln(y) ~ Normal (μ=xβ, σ2=f(x)), then
E(y|x) = exp(xβ +0.5 f(x))
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Determinants of Personal Care Determinants of Personal Care CostsCosts
Costs • increase with disability•decrease with age•decrease with presence of informal
carer•unaffected by gender and ethnicity•vary by local authority
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Costs by Age and Gender Costs by Age and Gender UK as a Policy LaboratoryUK as a Policy Laboratory
LA Costs of Personal Care - Averages over individuals receiving care (£ per week)
0.00
50.00
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15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
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Costs by Index of Disability Costs by Index of Disability (Resource Need)(Resource Need)
LA Costs of Personal Care - Averages over individuals receiving care (£ per week)
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250
A B C D E F G H I
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Charges by DisabilityCharges by DisabilityLA Charges for Personal Care - Averages over individuals
receiving care (£ per week)
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1 2 3 4 5 6 7 8 9
IoRN
£'s
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Model CalibrationModel Calibration
Estimate determinants of costs of care using Welsh dataset
Estimate determinants of needing care and of being in receipt of local authority care using FRS data
Match FRS disability classification with that used in Welsh survey
Select most disabled of those receiving LA care in FRS sample to receive personal care – match with proportions receiving LA personal care in Scotland (thus model mimics Scottish policy setting)
Stochastic simulation of model to maintain distribution of costs rather than focus on point estimate
Results weighted using FRS weights to represent UK/Scottish population
Example 4 - Simulating Dementia CostsExample 4 - Simulating Dementia Costs
Satellite Model
Not restricted to private households
Uses information on life expectancy, dementia prevalence, duration and costs
Competing risks model
Time aggregation to generate annual estimates
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Simulating Dementia CostsSimulating Dementia Costs
Weibull hazard used to model months of life expectancy after age 65
Scale and shape parameters set to approximate life expectancy patterns
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Life Expectancy by Multiple Deprivation Life Expectancy by Multiple Deprivation DecileDecile
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Prevalence of DementiaPrevalence of Dementia
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Dementia CostsDementia Costs
Types of “what if” questions?
What if prevalence rises/falls?
What if onset could be delayed by better medical interventions?
What if cost structure changes?
What if dementia sufferers cared for at home rather than in care homes?
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Dementia by Deprivation DecileDementia by Deprivation Decile
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Changed Individual Dementia Changed Individual Dementia PrevalencePrevalence
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Change in Costs Associated with Change in Costs Associated with Changed PrevalenceChanged Prevalence
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Modelling Dementia CareModelling Dementia Care
Model not specific to dementia – could run a different/wider range of competing risks
How to integrate calibrated satellite model with main dataset?
How to deal with care home residents on whom liuttle socio-economic information available
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ConclusionsConclusions
Calibration helps explain the obvious
But is no more powerful than the data on which it is based
Don’t overplay the results
Careful work with policy makers important, especially when calibration weak
ESRC Microsimulation Seminar Leeds 2nd July 2009
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Care CostsCare Costs
Most recent SE estimate of cost of providing FPC at home to pensioners in 2003-04 ~ £120m
Model estimate ~ £170m• Consistent with LAs spending approx £50m prior to
introduction of policy
What about the personal care costs of those aged under 65 requiring PC?
Model estimate ~ £130m
Fewer clients, higher cost per client
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Model ResultsModel Results
Weekly Costs by Age and Gender Household Net Income by Costs of Care Personal Care Costs by Disability Aggregate Annual Costs by Age and Gender Influence of Informal Carers On Costs UK Costs of Applying Scottish Personal Care
Policy to Domiciliary Clients
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Costs by Age and Gender Costs by Age and Gender
LA Costs of Personal Care - Averages over individuals receiving care (£ per week)
0.00
50.00
100.00
150.00
200.00
250.00
15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
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Costs by Household Net IncomeCosts by Household Net Income
Household Net Income Before Housing Costs by Care Status (weighted)
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25-34 35-44 45-54 55-64 65-74 75-84 85+
£'s
Not Receiving Personal Care Receiving Personal Care
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Costs by DisabilityCosts by DisabilityLA Costs of Personal Care - Averages over individuals
receiving care (£ per week)
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50
100
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A B C D E F G H I
IoRN
£'s
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Male Female
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Charges by DisabilityCharges by DisabilityLA Charges for Personal Care - Averages over individuals
receiving care (£ per week)
0
10
20
30
40
50
60
70
1 2 3 4 5 6 7 8 9
IoRN
£'s
per
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Male Female
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Aggregate Costs by Gender and Age Aggregate Costs by Gender and Age GroupGroup
Total Costs of Personal Care by Ageband - aggregate (£m)
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15-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
Males Females
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How Does Presence of Informal Carer How Does Presence of Informal Carer Influence Local Authority Costs?Influence Local Authority Costs?
Someone with an informal carer less likely to receive LA care
Someone receiving LA care will receive less costly support if informal carer present
This does not account for effects of informal care provision on labour market participation
When local authority care available, informal carers may act as gatekeepers and/or provide other services