Philadelphia, PA, May 2, 2017 — The Penn Wharton Budget Model (PWBM) is pleased to announce a $6.6 million commitment from the Laura and John Arnold Foundation (LJAF) to develop new, high-quality tools to evaluate the economic and budgetary impact of federal policy proposals. PWBM’s new tools will be powered by more sophisticated algorithms, granular data on corporations, and modeling of global transactions. The funding will also allow PWBM to develop forecasts regarding the impact of policy — on topics including taxes, international trade, Social Security, and immigration — over a longer time horizon than the standard ten-year budget window.
PWBM is a nonpartisan, independent applied research organization housed at the Wharton School of the University of Pennsylvania and developed by the Penn Wharton Public Policy Initiative. Launched in 2016, PWBM combines advanced economic modeling, big data science, cloud computing, and visualization tools to provide a “sandbox” in which different policy ideas can be tested before legislation is drafted. The policy tools are transparent and user-friendly, and provide a resource to policymakers, journalists, and members of the public who are seeking to understand the potential impact of policy decisions.
“We are delighted to receive this support from the Laura and John Arnold Foundation, which shares Wharton’s deep commitment to using data analytics to promote evidence-based decision making,” said Geoffrey Garrett, Dean of the Wharton School. “At this crucial moment when so many policymakers, economists, and the public seek transparent, accurate sources of information, our goal is to be the authoritative academic resource at the intersection of business and policy for catalyzing productive social change, reducing anxiety and uncertainty, and exploring the myriad opportunities generated by technology and globalization.”
Forthcoming updates will make analysis both more granular and more wide-ranging by adding census-level data into demographic features, modeling the diversity of corporations and firms in the U.S., and incorporating the effects of global economic policy shifts on U.S. companies. In addition, more sophisticated algorithms will allow users to project complex demographic and economic characteristics about households as they go to school, get married, have children, work, and retire. The enhanced PWBM models will advance the tools available for policymakers, media, economists, and the public. The PWBM team will provide nonpartisan, educational information to policymakers on Capitol Hill, publish white papers, and promote public understanding and use of fact-based tools in independent policy evaluation.
“Governments have an obligation to balance social good with financial responsibility. Decisions should be made in a thoughtful and deliberate manner, and legislators should use rigorous evidence to help them design effective policies,” said LJAF Vice President Josh McGee. “The Penn Wharton Budget Model will provide lawmakers with reliable tools that they can use to evaluate the potential impact of various policy options and to identify ways to promote economic growth and mobility.”
Since June 2016, more than 100 top news outlets have cited PWBM, including CNBC, the Wall Street Journal, CNN, Fortune, and Forbes. Users have run more than 300,000 simulations using PWBM tools. As of now, users can see the impact of more than 4,000 Social Security policy reforms and 125 immigration policy reforms. PWBM also provides analysis of tax reform plans with more than 500 options to set assumptions, spending policy, and baseline modeling.
“Since its launch last summer, the Penn Wharton Budget Model has already been used and reviewed by many policymakers and commentators,” said Kent Smetters, Wharton Boettner Professor and Professor of Business Economics and Public Policy, who leads PWBM. “This grant provides a wonderful opportunity to take PWBM to the next level with additional modules that will reinforce reliability, make accurate information more accessible, and we hope, benefit the U.S. economy.”
About the Laura and John Arnold Foundation (LJAF)
The Laura and John Arnold Foundation’s core objective is to improve the lives of individuals by strengthening our social, governmental, and economic systems. Its strategic investments are currently focused in criminal justice, education, evidence-based policy, sustainable public finance, and research integrity. LJAF has offices in Houston, New York, and Washington, D.C.
About the Wharton School
Founded in 1881 as the first collegiate business school, the Wharton School of the University of Pennsylvania is recognized globally for intellectual leadership and ongoing innovation across every major discipline of business education. With a broad global community and one of the most published business school faculties, Wharton creates ongoing economic and social value around the world. The School has 5,000 undergraduate, MBA, executive MBA, and doctoral students; more than 9,000 annual participants in executive education programs; and a powerful alumni network of more than 95,000 graduates.