Combining System Dynamics and Agent-Based Simulation to Study the Effects of Public Interventions on Poverty

Abstract

Poverty is a multidimensional social phenomenon that occurs in every economy around the world. Counteracting poverty is one of the tasks of public administration units. Under many programs financed from public funds, various tools and instruments can be used to combat poverty, but their implementation should be preceded by an in-depth analysis of the effects generated by their use. This is not easy, because the phenomenon of poverty is very complex, results from the arrangement of many interrelated heterogeneous elements, and the effects of actions are visible only after a long time. Hence, research in this area requires the use of an approach that can cope with the complexity of this phenomenon in dynamic terms. The aim of the article is to present the concept of a hybrid simulation model for studying the impact of public intervention on the level of poverty at local, regional and national level. The model is a hybrid of two computer simulation methods: System Dynamics (SD) and Agent-Based Simulation (ABS). SD method is used to model macroelements of the examined system (e.g. GDP level, labor market) and microelements (e.g. households and their members) are modeled using ABS. The article also shows the results of verification and validation of the proposed solution performed using the model for a case study. The presented solution can be used both by public administration units at various levels as well as by scientists - to conduct socio-economic research.