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Faulting the numbers.

Federal policy makers routinely make major decisions concerning changes in social and tax programs on the basis of "numbers" spewed out by complex computer models, which are designed to estimate the effects of such changes on expenditures, revenues and human behavior. Now, a National Research Council panel warns that these estimates are generally of unknown quality and may be seriously flawed.

The panel's report, released Aug. 1, identified two significant deficiencies: the poor quality of the available data and the lack of objective measures for assessing a given computer model's reliability and validity. "There is very little done to assess the validity of estimates, the amount of uncertainty in the estimates and the options for improving them," says economist Eric A. Hanushek of the University of Rochester, who chaired the panel.

Such deficiencies have led to incorrect estimates. For example, tax policy experts in 1981 misjudged the popularity of newly established individual retirement accounts, and their models greatly underestimated the subsequent revenue loss to the government. Other cost estimates have suffered because the only statistics available were out of date or incomplete. Arguing that detailed simulations of economic and social behavior are important to the policy process, the panel strongly urges the government to allocate sufficient resources to improve the quality of current computer models used for making cost estimates.
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Title Annotation:National Research Council panel warns that the computer-generated estimates on which policy makers base decisions are faulty
Publication:Science News
Date:Aug 24, 1991
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