Machine Learning Simulates Agent-Based Model Towards Policy

TL;DR

This paper employs machine learning to emulate an agent-based model, enabling efficient evaluation of policies across Brazilian metropolitan regions and identifying region-specific optimal policy strategies with reduced computational costs.

Contribution

It introduces a novel approach of using random forest algorithms to simulate an agent-based model, enhancing efficiency and parameter variation in policy evaluation.

Findings

Regions have inherent structures influencing policy outcomes.

Certain policies are more beneficial for specific regions.

Machine learning reduces computational burden and increases model robustness.

Abstract

Public Policies are not intrinsically positive or negative. Rather, policies provide varying levels of effects across different recipients. Methodologically, computational modeling enables the application of multiple influences on empirical data, thus allowing for heterogeneous response to policies. We use a random forest machine learning algorithm to emulate an agent-based model (ABM) and evaluate competing policies across 46 Metropolitan Regions (MRs) in Brazil. In doing so, we use input parameters and output indicators of 11,076 actual simulation runs and one million emulated runs. As a result, we obtain the optimal (and non-optimal) performance of each region over the policies. Optimum is defined as a combination of GDP production and the Gini coefficient inequality indicator for the full ensemble of Metropolitan Regions. Results suggest that MRs already have embedded structures that favor optimal or non-optimal results, but they also illustrate which policy is more beneficial to each place. In addition to providing MR-specific policies' results, the use of machine learning to simulate an ABM reduces the computational burden, whereas allowing for a much larger variation among model parameters. The coherence of results within the context of larger uncertainty--vis-\`a-vis those of the original ABM--reinforces robustness of the model. At the same time the exercise indicates which parameters should policymakers intervene on, in order to work towards precise policy optimal instruments.