Baseline and Alternative Simulations and their Uses

The two main types of simulations performed by TRIM3 are baseline simulations and alternative simulations.

A baseline simulation applies the actual program rules that were in effect in a particular year to the input data for that year. A “baseline” simulation is performed for each year for most of the simulated programs. In simulating transfer programs, TRIM3 identifies units eligible for assistance under each program, and selects participants in such a way as to match administrative targets for the size and composition of the caseload. In simulating tax programs, TRIM3 calculates each unit’s taxes under the rules in effect in the year being simulated, and assumes the unit pays the full amount of taxes that are due.

Baseline simulations serve three main functions. First, they augment the input data (usually each year's March CPS data) by creating additional micro-level variables that are not present in the input data. For example, the model adds variables that indicate whether each individual or household is eligible for each of the main governmental transfer programs, and whether each tax unit is eligible for various types of tax credits. Second, the baseline simulations correct for the under-reporting of transfer program income that is prevalent on survey files. By simulating a caseload for each transfer program that matches the actual caseload in size and key characteristics, the model creates a dataset that can be used in place of the input data when under-reporting would pose a problem for a particular analysis. Third, baseline simulations serve as the comparison point for "alternative" simulations--simulations of proposed or hypothetical program rules.

TRIM3 can simulate a wide variety of alternative simulations, ranging from simple simulations involving a single change to one simulated program, to complex scenarios affecting a large number of programs. Because the rules affecting eligibility, benefits, and the tax calculation are heavily parameterized, a wide variety of alternative policy scenarios can be modeled simply by changing the value specified for a particular program rule or set of program rules. In addition, users can directly modify much of the logic underlying the tax models using the TRIM3 "forms language". Changes are made through a point and click interface and only affect the run in which they are made.

TRIM3 captures the interactions that occur when benefits from one program affect eligibility and benefits in another program. For example, a change in a TANF benefit computation rule that increases a family’s TANF benefit would have the secondary effect of decreasing the family’s SNAP benefit. A model that did not capture this secondary effect would overestimate the extent to which the TANF rule change increases the family’s available resources.

Note that registered users can access the results of baseline simulations, as discussed next. Additional arrangements are required in order to obtain an account that allows a user to run his/her own alternative simulations.