# Policy Simulation Model

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The '''Policy Simulation Model''' ('''PSM''') is a static [microsimulation](/source/microsimulation) [model](/source/model_(abstract)) which encapsulates the tax and benefits system, and population, of Great Britain.<ref name="Lyons-2007">{{cite book |author-link=Michael Lyons (BBC chairman) |last=Lyons |first=Michael |chapter=Annex B: Introduction to Inquiry modelling |chapter-url=https://www.google.com/books/edition/Place_shaping/eYPrgXCwMr0C?hl=en&gbpv=1&pg=RA1-PP4 |title=[Lyons Inquiry into Local Government](/source/Lyons_Inquiry_into_Local_Government): Place-shaping: a shared ambition for the future of local government, Annexes |publisher=[The Stationery Office](/source/The_Stationery_Office) |page=14 |date=March 2007 |access-date=22 June 2025 |isbn=978-0119898583}}</ref> It is based on survey data from the [Family Resources Survey](/source/Family_Resources_Survey) (FRS) which is uprated to simulate the current year, together with several years into the future through a process of static uprating. The uprating process covers a complex range of processes, ranging from simple numerical uprating of financial values, to modelling the draw-down of old benefits through to the implications of the rising state pension age. 

The model is built using [SAS](/source/SAS_System) and is owned by the GB [Department for Work and Pensions](/source/Department_for_Work_and_Pensions) (DWP). It produces outputs including the financial (and work-incentive) impacts on a representative sample of the GB population from hypothetical policy changes to the tax and benefits system.<ref name="Lyons-2007" /> It is managed by a central team of analysts who both develop the model and provide year-round customer service to analytical users of the model spread across the DWP corporate centre. It is used for poverty and scenario analysis associated with the development of new policies, including [Universal Credit](/source/Universal_Credit).<ref>{{cite book |author-link=Department for Work and Pensions |author=DWP |url=https://www.google.com/books/edition/Universal_credit/00OPVTAQku8C?hl=en&gbpv=1&pg=PA54 |title=Universal Credit: welfare that works |publisher=[The Stationery Office](/source/The_Stationery_Office) |pages=54–55 |date=2010 |access-date=22 June 2025 |isbn=978-0101795722}}</ref>

==See also==
*[Pensim2](/source/Pensim2), another model with the same ownership
*[TaxBen](/source/TaxBen), the [IFS](/source/Institute_for_Fiscal_Studies) equivalent model
*[IGOTM](/source/IGOTM), the [HMT](/source/HM_Treasury) equivalent model

==References==
{{Reflist}}

==External links==
*[http://www.dwp.gov.uk DWP homepage]

Category:Department for Work and Pensions
Category:Microsimulation

{{Econometrics-stub}}

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