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5 minutes ago, Richard Bradley said:
Hi Mark, the welfare benefits are largely captured through travel cost savings, which, in a perfect economy, includes capturing associated secondary benefits. However, there are wider benefits associated with economic failures in an imperfect economy and with agglomeration effects. These types of wider benefits are now largely captured. However, what is not as clear is the distributional effects and how these should be accounted for in decision making. For example, if we target infrastructure at a poorer or wealthier area we have to displace the impacts in some way as there is assumed a fixed amount of ‘water in the economy pipework’. However, this doesn’t level-up the UK and if we can understand quality of life then we might be able to understand distributional impacts. For example, the poorer area outcome could be higher wages, which then reduces crime, health issues, etc. This is tackling the ’causes of causes’ and goes across sectors. But we can’t do this effectively unless we can bring the silos together. DG’s have great potential to do this. Thanks Richard
Sounds good. And the microsimulation approach is perfectly suited to capturing these kinds of distributional consequences at quite a fine scale. The origins of these methods grounded in understanding consequences of taxation, benefits or financial policy across sub-groups, while advances in spatial MSM means that we can translate this into specific regional and local environments.