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Real-time analysis for policy making Modelling household incomes, taxes and benefits

Given the rapid spread of the COVID-19 virus, the State has had to respond rapidly and quite severely to flatten the curve and slow the spread of the virus.

This has had significant implications across Ireland on many aspects of life, health, economic and social and has been highly asymmetric with different groups affected in different ways.

Professor Cathal O’Donoghue, Dean of Arts and Social Sciences at NUI Galway, has a new project underway to develop a mechanism to deliver real-time analysis of the economic, social and health implications across the income distribution to facilitate policy making. By modelling household incomes, taxes and benefits, the project will help identify who is most likely to suffer from loss of income, leading to more effective targeting and budgeting of income support measures.

"The intention is to develop a method to deliver real-time analysis of the implications of COVID-19 interventions. This will help us identify who is most likely to suffer from loss of income, leading to more effective/efficient targeting of income support measures and improved cost estimates of these measures," explains Professor O’Donoghue.

About the project

Overcoming time lags

In order to understand how policy, economic and social changes affect people in different ways, household survey data is used.

However there is a time lag of two years between collection and release of household income survey data for research and analysis. In normal times quite a lot happens in a two year period, but in a crisis the changes are so significant that should a lag can mean the data is relatively meaningless.

"Nowcasting"

This project propose to overcome this data gap by developing a “nowcasting” methodology to use more recent data on employment and prices etc to calibrate a simulation model of household incomes, taxes and benefits to produce a real time picture of the population and who is affected differentially — known as microsimulation.

Professor O'Donoghue added: "We will use this model simulate counter factual real-time income distributions as a function of more timely data to predict the economic, social and health distributional impact of the COVID and to assist policy makers to assess the differential impact of the mitigation measures proposed."

The project is funded under the national COVID-19 Rapid Response Research and Innovation funding, via the Health Research Board and Irish Research Council. #CovidResearchIreland

About the PI

Professer Cathal O’Donoghue has been from 2016, the Dean of Arts and Social Sciences at NUI Galway and Professor of Public and Social Policy. Prior to this he was since 2005, Head of Teagasc’s (Ireland's Agriculture and Food Development Authority) Rural Economy and Development Programme, one of the four research programmes of Teagasc. He was a member of the board of Teagasc’s research directorate. He was a member of the Fund Council of CGIAR, a $1 billion a year International Agri-Food Research organisation from 2014-2016.

His personal research programme involves the development and use of policy simulation models, for which he holds a Chair (extra ordinary (adjunct)) at the University of Maastricht, as well as an adjunct position in UCD. He has published over 150 research papers, five books and supervised over 25 PhD students to completion. He has been an advisor to many international organisations and was a long term advisor to the UK Government's Department of Work and Pensions on policy modelling earlier in his career.

About the Whitaker Institute

The Whitaker Institute for Innovation and Societal Change is the major structure for supporting research in business and the social sciences at NUI Galway. Inspired by the themes that motivated T.K. Whitaker’s own life’s work as an economist and public servant, the Institute supports interdisciplinary, distinctive, and transformative research on challenges facing business, society and public policy in Ireland and internationally to achieve a prosperous, sustainable and inclusive society.

The Whitaker Institute supports rigorous, relevant and innovative research at NUI Galway in business and the social sciences with scientific, policy, practice and societal impacts.

The Institute’s research priorities are centred around three broad themes of national and international importance: Business, Innovation and Economic Development; Public Sector Innovation and Reform; and Sustainable and Inclusive Societies. These research themes are advanced by 16 multi-disciplinary research clusters, consisting of more than 320 members. While the Institute’s primary affiliation is with the College of Business, Public Policy and Law, the Institute also draws members from each of the other four colleges at NUI Galway.