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Jocelyn's Homepage Economics on the Internet: Guardian Vhma X-RAM magazine Interview

Economics on the Internet

A revised version of this article appeared in the Guardian On-Line magazine for November 23rd 1995.
Would you grab political points by taking 5p off income tax (and slipping it back onto VAT and drinks duties where, hopefully, no-one will notice)? Or would you ``tax the rich until the pips squeak''? On Monday 23rd of October, the Institute for Fiscal Studies launched its ``Be Your Own Chancellor'' program onto the World Wide Web. This economic simulation lets you change income tax rates, vary national insurance contributions, raise and lower the price of beer and cigarettes, and alter the tax system in a number of other ways. It calculates the effect on a range of example families, and compares this with their situation under today's tax system, as well as telling you how much your changes would increase or decrease Government tax revenues.

As Virtual Chancellor, you can get a feel for the constraints the real Chancellor faces in setting his Budget, while learning how the UK tax system works. This - something only one person can do in reality, and then only once a year - demonstrates the educational value of computer simulations ...

... and of the Web! To make the program publicly available five years ago, we'd have needed a version for every machine from an Amiga to a Vax, not to mention the plethora of disc formats and terminal interfaces to contend with. Now, we just hook up our program to a Web server. The IFS is already experimenting with the Web as an input and output medium for in-house programs - something which saves a lot of tedious windows hacking, as the browsers do the hard work of displaying forms and formatting text. We can use the same techniques for programs to be accessed from outside. Does Mr Clarke have a browser? We don't know, but if he does, he might try out some ideas ... and so can anyone else, whether GCSE student or concerned taxpayer.

Of course, simulations aren't always accurate. If you triple the duty on spirits, you'll be told that you've earned the Government £1400 million in excise. In reality, people would switch to beer or just stop drinking. The IFS simulation ignores such ``behavioural'' effects. However, this limitation is spelt out in the accompanying help text, and discussed by research papers in the IFS' on-line library. These, acessible via links in the Be Your Own Chancellor's input and output pages, add to its value as a tool for teaching economics. It's essential to understand the limitations of simulation.

At 6pm on Budget night - Tuesday 28th November - Be Your Own Chancellor will be followed by ``Budget 95'', which will allow you to enter your own income and expenditure and find out how the Budget has affected you personally. Outside the IFS, although many universities and organisations ignore the Web's educational possibilities, there are a few nice programs. These include the Whole Frog Project for frog anatomy, and the Geometry Forum for limits, vectors, and other mathematical concepts.

At their best, such programs become ``educational microworlds'', where learners can take something new, play with it, explore its limitations, relate it to their own experience. The microworld concept originates with Seymour Papert, inventor of the Logo programming language. He used it in building a maths microworld or ``Mathland'', where mathophobic children learn by programming Logo-driven turtles to draw houses, flowers, and other shapes. He describes this work in Mindstorms: Children, Computers, and Powerful Ideas (2nd edition, Harvester 1993), a book which I highly recommend and have tried to follow in my own teaching. Links to some of Papert's on-line papers, and to the other sites mentioned, can be found from my home page, address at the end of this article.

I believe the IFS simulations are important for another reason. In maths and science, we may find that nature hides information from us, but we can hope it does so without malice. In politics, things are otherwise. As we approach the next election, the parties seem committed to the belief that they can either lower taxes while retaining public services, or alternatively that they can improve services without raising taxes. Is this possible? No party wants to take political risks by admitting their policies will make some of us worse off, whether because of higher taxes or lost services. Carefully used, programs like Budget 95 and Be Your Own Chancellor increase our freedom of information by allowing us to explore the effect of Government policies and uncover results that some would prefer to remain hidden.