Guide to Scenario Analysis in International Futures (IFs)
Introduction
The purpose of this document is to facilitate the development of scenarios with the International Futures (IFs) system. This document supplements the IFs Training Manual. That manual provides a general introduction to IFs and assistance with the use of the interface (e.g., how do I create a graphic?). In turn, the broader Help system of IFs supplements this manual. It provides detailed information on the structure of IFs, including the underlying equations in the model (e.g., what does the economic production function look like?). This document should help users understand the leverage points that are available to change parameters (and in a few cases even equations) and create alternative scenarios relative to the Base Case scenario of IFs (e.g., how do I decrease fertility rates or increase agricultural production?). It proceeds across the modules of IFs, such as demographic, economic, energy, health, and infrastructure, to (1) identify some of the key variables that you might want to influence to build scenarios and (2) the parameters that you will want to manipulate to affect your variables of interest. The Training Manual will help you actually make the parameter changes in the computer program and the Help system will facilitate your understanding of the structures, equations and algorithms that constitute the model. We begin by introducing the types of parameters within IFs and then proceed to a discussion of variables and parameters within each of the IFs modules.
A Note on Parameter Names
In this manual we will provide the internal computer program names of variables and parameters, as well as their descriptions. Those names are especially important for use of the Self-Managed Display form, which provides model users with complete access to all variables and parameters in the system. Most model use, however, employs the Scenario Tree form to build scenarios and the Flexible Display form to show scenario-specific forecasts, and both of those forms rely primarily on natural language descriptions of variables and parameters. To match the names provided here with the options in those forms, you can use the Search feature from the menu. The Training Manual describes how to use features such as the Flexible Display form to see computed forecast variables in natural language. And it also describes how to use the Scenario Tree form to access parameters in something close to natural language. Nonetheless, it helps very much in the use of those features and the model generally to know the actual variable and parameter names.
Types of Parameters in IFs
Equations in IFs have the general form of a dependent or computed variable, as a function of one or more driving or independent variables. Variables, like population and GDP, are the dynamic elements of forecasts in which you are ultimately interested. For instance, total fertility rate or TFR (the number of children a woman has in her lifetime) is a function of GDP per capita at purchasing power parity (GDPPCP), education of adults 15 or more years of age (EDYRSAG15), the use of contraception within a country (CONTRUSE), and the level of infant mortality (INFMORT). In the most general terms the equation is
Parameters of several kinds can alter the details of such a relationship. That is, parameters are numbers (also represented by names in IFs), that help specify the exact relationship between independent and dependent variables in equations or other formulations (including logical procedures called algorithms). For instance, the model may contains different parameters that tell us how much TFR rises or falls per unit change in GDP per 6 capita, education levels, contraception use, and infant mortality;1 and it contains still others to set bounds on the lower and/or upper values of TFR over the long run (obviously TFR should never go negative and probably we will not even want it to go, at least for a long time, to a very low level such as an average of 0.5 children per woman). Some of these parameters are more technical than others in the sense that they may significantly affect the overall stability of the model if users are not very careful with the magnitude or direction of the changes they make; we will focus heavily in this manual on parameters that are easiest to interpret and modify.
In many cases, we are more interested in using a parameter to make a direct change to a variable, rather than indirectly affecting a variable like TFR through one of its drivers. We often refer to this as the "brute force" method of changing a variable, and this can be done by multiplying the entire result of a basic equation like that above by a number, adding something to that result, or simply over-riding the result with an exogenously (externally) specified series of values. In the case of TFR we use the multiplier approach, which is described below. The strengths of this approach should be obvious: it preserves model stability, and makes the model more accessible for users. However, the weakness is that in many instances it is more realistic to affect one of the drivers of TFR rather than TFR directly.
Beyond multipliers, there are many other types of parameters that IFs uses, although we are forced to abandon TFR to provide examples. For instance, a switch parameter may turn on or off a particular formulation in preference to another. A target may specify a value towards which we want a variable to move gradually (we would need to specify both the target level and the years of convergence to it).
Overall, key parameter types are:
1. Equation Result Parameters. Most users will use these parameter types far more often than any other. The three types are:
- a. Multipliers. This most common of all parameter types in scenario analysis comes into play after an equation has been calculated. They multiply the result by the value of the parameter. The default value, i.e. the value for which the parameter has no effect and to which multipliers almost invariably are set in the Base Case, is 1.0. These parameters are usually denoted with the suffix -m at the end of the parameter name.
- b. Additive factors. Like multipliers, these change the results after an equation computation, but add to the result rather than multiplying. The default value is normally 0.0. These are usually denoted with the suffix -add at the end of the parameter name.
- c. Exogenous Specification. Sometimes these parameters override the computation of an equation. In other cases, they are actually substitutes for having an equation; that is, they are actually equivalent to specifying the values of a variable over time for which the model has no equation. This typically means establishing a new exogenous series. They typically will have the name of the variable that they over-ride within their own name.
2. Targets. Especially for the purposes of policy analysis, we often want to force the result of an equation toward a particular value over time (e.g. to achieve the elimination of indoor use of solid fuels). Target