Counterbalance Economics (CBE) Modelling

Computer simulations allow researchers to model real-world and hypothetical situations and test outcomes. We have used an existing computer application called Netlogo, which has been around for over 25 years. The Wealth Distribution and Bidding Market models are examples of Agent Based Modelling (ABM) tools and used for many years to answer various questions about  how populations behave from an economic perspective and to test what if scenarios. 


Now that you know a bit about Counterbalance Economics (CBE), the next step is to model it using the Netlog ABM tool to allow validation, verification and replication (Wilensky & Rand,  2015, pp. 250-251).


We have made the amended ABM tool and  economics data available to anyone with a computer (or smartphone) to allow individuals and researchers to validate, verify and replicate the results published here. The initial download and setup will take approximately 5 min.

What is an Agent Based Model? The creator of Netlogo, Professor Uri Wilensky and Professor William Rand co-authored a book on Agent Based Modelling (Wilensky & Rand, 2015, pp. 250-251). Hear an overview of ABM on the YouTube links:

Step 2. Download Wealth Distribution Model
Click the image below to download the file, save it somewhere safe, so you can open it from the Netlogo application (File menu)

Step 1. Open Web-based Netlogo application. Click on the image below to begin: 


Please note that Netlogo program works better when downloaded onto PC or MAC

Step 3. Click image  to open Wealth Distribution Model Info page (PDF) 
PDF details how to run the model.  Press Setup and Go buttons! Watch what happens when the simulator is run in the
Neoliberal-v-GovernmentRun setting, then compare it to the Counterbalance! 

The Wealth Distribution Model simulates community and individual wealth as well as income inequality. First off, run the model in Neoliberal-v-GovernmentRun setting. Then run the Counterbalance setting to see what would happen if the CBE was added to the Australian, US or UK economies.

Step 4. Download Bidding Market Model - Save it. Open Netlogo, choose the File button to find the file & open it.

The Bidding Market Model simulates the level of unemployment, and what would happen if we provided a job for everyone who wanted one. Compare Australia's economic system and then watch what happens once the CBE is implemented.

Step 5. Click image to Open/Save the Bidding Market Info (PDF). PDF details how to run the model.

The Wealth Distribution model allows us to theoretically simulate any global economy and by changing the chooser, also compare the results obtained with the results that would have been obtained had the CBE model been implemented/added to that economy. The ABM was used to simulate the economies of Australia, US and the UK and was run 15,000 times to obtain the 30 observations contained in the regression analysis tables, below.
We expected that adding the CBE to a given economy would significantly reduce income inequality. Based on our interpretation of the STATA regression table below, the null hypothesis can be rejected given that p < 0.001 and F is larger than critical F. 151.29 > 5.6096.

We expected that adding the CBE to a given economy would significantly increase the wealth available as measured by the GDP. Again, based on our interpretation of the STATA regression table (below), the null hypothesis can be rejected given that

p < 0.001 and F is larger than critical F. 33.88 > 5.6096

The Bidding Market model has been adapted to test the inflationary pressures that would occur if we tried to reduce unemployment to zero and then compared that to what would happen if the CBE model had been added. Below is a graph showing the results.

The Bidding Market model simulates employing everyone who wanted a job, which produces inflationary pressure in the standard economic systems.

Compare this to the massive reduction of inflationary pressure after the CBE model is added to that economy. It is not designed to predict what level of inflation would occur, but rather test if implementing the CBE would reduce the inflationary pressure. 

The STATA Results

Simple instructions on how to download and test the models yourself

References


Wilensky, U. (1998). NetLogo Wealth Distribution model. http://ccl.northwestern.edu/netlogo/models/WealthDistribution. Center for

      Connected Learning and Computer-Based Modeling, Northwestern University, Evanston, IL.


Wilensky, U. (1999). NetLogo. http://ccl.northwestern.edu/netlogo/. Center for Connected Learning and Computer-Based Modeling,

      Northwestern University, Evanston, IL.


Wilensky, U., & Rand, W. (2015). Verification, Validation and Replication. In An introduction to agent-based modeling: Modeling natural, 

      social, and engineered complex systems with NetLogo. The MIT Press.