Economics Network CHEER Virtual Edition

Volume 9, Issue 3, 1995

IFS Graphic

Be your own Chancellor

Mike Emslie
CTI Economics, University of Bristol

In the last issue of CHEER Guy Judge in his editorial remarked, that those who currently use computers in their teaching, have started to consider just how the WWW can be harnessed to assist learning and teaching in a real and practical sense.

Well here's an excellent example brought to us from an unlikely source the IFS in London in the form of a BYO package. No, this isn't a bring your own bottle binge, but an opportunity to be your own Chancellor. The Institute for Fiscal Studies, dubbed by the "Times" as an economic think tank, has collaborated with the BBC and with sponsorship from the ESRC and has produced an interesting and interactive way for anyone - student or academic - to utilise one of the current econometric models running on the hardware at the IFS in order to try their hand at managing the UK Tax regime.

To connect to the IFS web server you link to the URL (uniform resource locator):

http://www2.ifs.org.uk

This will bring you to the IFS Home Page:

IFS WWW Home Page Graphic
Figure 1 - IFS Home Page

The launch of this particular service from the IFS has been of course, to coincide with the United Kingdom Chancellors' November Budget statement. The model contains a set of default parameters which will be reset by the IFS team at 18:00 on Budget day fo r cybernauts to investigate just how the changes made to the tax regime will affect the sample families displayed.

In order to use this Web based tool effectively you will need to be using a browser (web client) that supports forms so that you can easily submit any changes that you choose to make to the model. The taxation variables are displayed to the user in a numb er of tables into which the modifications can be inserted.

IFS Submission Page Graphic
Figure 2 - Part of the submission form

In your role as Chancellor you can enter your desired changes in five major taxation blocks. Income tax rates and applicable bands are in a table that you can alter by either entering your own assumption or scrolling to one of the alternative assumptions offered; the tax allowance table can similarly be modified; as can a table relating to National Insurance and finally a table relating to Indirect Taxation.

Once you are satisfied that all your changes are adequately reflected in the forms, clicking on the submit button will action the IFS model and the output will be returned pretty much instantaneously to your browser (although I wouldn't expect that to be the case on budget day!!). The output is summarised in terms of the likely impact on a number of socio-economic family groups ranging from the single unemployed person to a family group with joint income of 50K, to singles and couples on small pensions.< P>

IFS Results Page Graphic
Figure 3 - A sample "How Families did" screen

Since you are only being permitted to modify the key taxation variables and have no input on questions relating to the Chancellors borrowing or spending plans the modelled impact on these are also fed back to you as consequences of your changes to the tax regime. So it is possible to experiment with scenarios where you might wish for example to make changes to the tax regime that would have socio-economic implications while being fiscally neutral.

From a pedagogical perspective the ways in which this interactive simulation material could be used, particularly for Introductory (or Principles of .....) Economics courses, are clearly quite diverse. This could for example be set as a discovery project to a group of students as an individual assignment, as a group project, or if you lack the facilities to allow hordes of students loose on the Internet, it would be possible to run a number of alternative scenarios (downloading the results into say a Powe rpoint presentation!) and then use these to form the basis of a lecture or lectures.

The IFS can be found at:

Institute for Fiscal Studies, 7 Ridgemount Street, London, WC1E 7AE Tel: 0171-636-3784
The Team responsible for the "BYO Chancellor" are: Graham Stark, Jocelyn Paine, and Julian McRae

If you wish to heap criticism, acclaim or abuse on the team, you will find their email addresses on the web site or you can mail the IFS general mailbox at: mailbox@ifs.org.uk

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