Page images

record is fairly simple, extensive staff time is needed to digest the documentation for the files and to develop working files which can be used for convenient analysis.

There is a tendency for researchers developing questionnaires to try to include all of the data which could possibly have relevance in a given situation. This results in treating a longitudinal collection instrument as if it were a case study. This tendency may contribute to the excessive expansion of the survey instrument without a concomitant increase in the value of the data. The result is a burdensome survey with a complex file and all of the related problems of analysis.

The proliferation of longitudinal survey activities, especially those utilizing general population samples, and the rich data base potential combined with the inherent high cost, has resulted in general suggestions for the establishment of a national omnibus longitudinal survey. The main argument offered in support of this proposal is the sharing of the high cost of such an effort. The problems of burden, conditioning, panel decay, and others suggest that much more research needs to be accomplished before such an idea should be acted upon. However, it is axiomatic that longitudinal surveys represent such a large public investment that the broadest usage should be encouraged consistent with the previously voiced concerns.

During the next decade, serious work needs to be done to improve the techniques for analyzing longitudinal data.

continue to use the contractor which began a longitudinal project to complete it even though the project could take many years. In the past, longitudinal surveys have been treated like all other data collection efforts. An agency perceives a need, develops an instrument, establishes a collection mechanism and an intuitive analytical plan. Most agencies then initiate a competitive procurement to collect and process the required data. When competitive procurement is used for a longitudinal survey, the survey will generally be put out for bids at least once after the initial contract but probably more often during the period of the study. The introduction of a new contractor in the course of a continuing process is disruptive at best. The discontinuity of contractors causes damage to the data as well as significant additional expense and delay to the sponsoring agency.


2. Prior to the beginning of detailed design work

on a longitudinal survey, preliminary clearance should be obtained from the Office of Federal Statistical Policy and Standards or the Office of Management and Budget if administration records are involved. The clearance request should specify the universe to be covered, the size of the sample, the nature of the basic inquiry and any other information then available. This information will then be published in the Statistical Reporter to familiarize agencies which may have similar interests with the proposed program. This would permit the more effective coordination and exploitation of longitudinal surveys early in the development process.


1. Steps should be taken to modify the Federal

procurement process to permit an agency to



The development of long-term economic projections is not a new activity; there have been several long-term economic forecasting initiatives, including the Paley Commission effort in 1952 and the Interagency Long-Term Growth Project in the early 1960's. Recently, however, the interest in longterm growth projections has accelerated. For purposes of this review, long-term models are those which deal with developments over 5 or more years. The Office of Federal Statistical Policy and Standards with its responsibility for establishing statistical policy for all Federal Government agencies, has recognized the need for improved longterm statistical forecasting models. As a result, an Ad Hoc Interagency Committee on Long-Term Growth Projections was established in 1975 to review existing efforts in Federal agencies, to identify areas of common interest, and to examine policy options for improved coordination and integration of some of the various models.

policies which at least partially insulate institutions and systems from the many sources of instability.'

Thus, in discussing and evaluating long-term economic growth projections, one must always keep in mind the fact that, under the present economic instability, the best forecasting efforts may not be accurate enough in retrospect. It is important, however, to try to forecast the impact of current Government actions and outside events on the level of economic activity as a whole, on individual sectors and regions of the economy, and on the Federal budget in particular. Some guide to the potential effect of proposed programs derived from long-term forecasting can be an important policy tool when used in combination with other factors in comparing the impact of several possible alternative programs. Thus, the present use of long-term economic projections lies more in contributing an additional analytic dimension to the decisionmaking realm than in the area of actual knowledge of the future.

A list of several of the agencies presently involved in long-term projections illustrates the present scope of such activities within the Federal Government. The Economic Growth Branch and the Regional Economic Analysis Division of the Bureau of Economic Analysis of the Department of Commerce, the Economic Growth Division of the Bureau of Labor Statistics of the Department of Labor, the Economic Division of the Economics, Statistics, and Cooperatives Service of the Department of Agriculture, the Department of Energy (including units previously in the Federal Energy Administration and the Energy Research and Development Administration), the National Science Foundation, the Environmental Protection Agency, various Bureaus of the Department of the Interior, and the Federal Preparedness Agency of the General Services Administration all engage in long-term forecasting at some level. They have participated in the review of existing efforts presented in the next section.

At the outset, it is appropriate to recognize the limitations and difficulties of long-term economic forecasting. In a recent report, Data Resources, Inc. (DRI) discussed several sources of instability in the economy at present, including the disequilibrium of the international relations system, the world commodity situation, the legacy of double digit inflation, the rapid changes of relative prices, and the overall financial condition of the economy. DRI concluded that:

Under these circumstances, it is very difficult to develop serious long-range plans for government and business. Economic planning is offered as one of the solutions to our difficulties. There are longrange matters which deserve better attention from our government. But increasing frequency of shocks and the continued uncertainties make it totally inappropriate to draw up elaborate plans which assume that the future can be known. The rational strategy for businesses and governments in an environment such as this one is quite different: to develop quick responsive capabilities to new shocks as they may come along, and to devise

[blocks in formation]

Specific Project Descriptions

BEA Growth Model

The Bureau of Economic Analysis (BEA) of the Department of Commerce is engaged in continuing development of, and projections with, a moderatesized annual growth model of the U.S. economy. The BEA Model provides a projection of Gross National Product (GNP) and its components productivity, inflation rates, income items, and other aspects of the national economy. The BEA group maintains communications with other governmental units interested or involved in related work, especially the Bureau of Labor Statistics (BLS), in arriving at assumptions to be used for the projections.

The BEA model has also been applied within BEA to analyze the sensitivity of the economy to changes in various fiscal policy instruments and to determine capital requirements for full employment production. In addition, the model projections are used to assist other units within the Department of Commerce and other Federal agencies in their analyses of future economic conditions.

The major use of the projections within the Department of Labor is to supply an economic and manpower framework upon which estimates of future occupational requirements are made. The Bureau of Labor Statistics regularly publishes detailed information on the outlook for employment in a large number of occupational categories.

The projections have also been used within the Labor Department and other parts of the Federal Government as a framework for assessing a number of diverse economic problems such as capital requirements, manpower utilization, and energy policy. In addition, several State and regional agencies, private research groups, and business organizations have used the projections as a “national" framework within which to develop their own, generally more disaggregated, projections. In order to make the projections as generally available as possible, a large amount of detail is published and, in addition, historical and projected data bases are made available on computer (magnetic) tape.

BEA-BLS Coordination

BLS Economic and Employment Projections Model

The program of economic growth studies in BLS develops 5. to 15-year economic and employment projections of the U.S. economy by industry. The projections involve a detailed study of the growth of the U.S. economy under alternative scenarios, embodying assumptions about Federal economic policy and other factors which shape the future economic environment.

Attention is given to labor force and productivity growth, capital and material requirements, and changes in technology and the patterns of demand from individuals, governments, business and foreigners. Projections of output levels as well as labor and material requirements are currently made using a 125-sector disaggregation of the U.S. economy. In addition, staff capabilities, data bases and models developed for the projection effort are regularly employed to estimate the impacts of various Federal programs, legislative proposals, and other current or anticipated developments which may affect distribution of demand, rate of economic growth, or level and distribution of employment.

In the early 1960's the Interagency Growth Project (consisting of BLS, BEA and OMB, and chaired by the President's Council of Economic Advisers) guided and funded the development of a basic projection model by Dr. Lester Thurow, then at Harvard. Both BLS and BEA have enlarged and modified this basic model to reflect their separate needs for detail and focus in economic projections. They maintain close communications to ensure comparability of results from the two models in the sense that, given the same fiscal policy assumptions, the models will project the same growth rates of GNP and the same unemployment levels.

Frequently, their uses of the models differ in that BLS sets an unemployment assumption and modifies the fiscal policy assumption to achieve the assumed level of unemployment. BEA's model can be used this way, but BEA generally assumes various proposed fiscal policy packages and observes what the resulting unemployment rate would be for each.

OBERS Program

[blocks in formation]

The Regional Economic staff of the Bureau of Economic Analysis has a separate projection effort in cooperation with the Economics Division (formerly Economic Research Service-ERS) of the Department of Agriculture to produce area economic projections of population, employment, personal income, and earnings for 37 industry groups. BEA produces the major economic projections, while the Economics, Statistics, and Cooperatives Service produces projections only for the agricultural sector of the economy. This subnational projection program was begun at the request of, and with financing by, the U.S. Water Resources Council which uses the projections to assess water resources requirements and to evaluate programs. The projections involve a combination of econometric modeling and judgment.

ESCS Economic Projections Program

The agricultural portion of the OBERS projections is derived from a larger program within the Economics Division of the Economics, Statistics, and Cooperatives Service (ESCS). When the Economic Research Service (ERS) was reorganized in 1973, the National Economic Analysis Division (NEAD) was given responsibility for developing an additive, ERSwide Economic Projections Program with a quickresponse capability. NEAD has developed the core of the National-Interregional Agricultural Projections (NIRAP) system which provides OBERS data as one of its functions.

Energy Research and Development Administration (ERDA) Projections

Also prior to creation of the Department of Energy, energy-related projections were published as a part of "A National Plan for Energy Research, Development and Demonstration: Creating Energy Choices for the Future." These projections were the product of a system created for the Energy Research and Development Administration (ERDA) by the Brookhaven National Laboratory (BNL), which used as its macroeconomic framework the DRI projections. The projections, which were for the years 1985 and 2000, include total energy demand, imports required, electricity used, and other factors of the national energy system, projected under a variety of scenarios.

Projections of the energy system in 1985 and 2000 based on alternative assumptions were used extensively by ERDA in developing the substance of their Plan for Energy Research, Development, and Demonstration. Implications of various alternatives, such as (1) conservation and development of greater efficiencies at end use or (2) extracting more coal and oil from current locations by developing more effective recovery technology, are examined in terms of projected imports, demand, and other facets of the energy system. The results suggest which approaches are best for long-term and intermediate-term periods.

The NIRAP system is a computerized simulation of the food and fiber system, with a 10-year horizon for most projections. It can simulate alternative futures economic conditions based on scenarios differing with respect to major uncertainties which have an impact on food and fiber and with respect to policy decisions and programs designed to alleviate specific problems. By systematic scenario development and comparative analysis of alternative future economic conditions, the range of possible adjustment paths for food and fiber can be bracketed, an early warning of potential difficulties provided, and possible solutions to potential problems and trade-offs between policy goals evaluated.

Environmental Protection Agency

The Environmental Protection Agency (EPA) established the Strategic Environmental Assessment System (SEAS). It was a collection of interdependent models used to forecast the state of the environment which would result from alternative environmental policies and socioeconomic trends. Forecasts were presented annually through 1985. The socioeconomic trends were predicted outside the SEAS system, and the environmental policy alternatives were generated by decisionmakers in EPA.

Other Modeling Efforts

Throughout the Federal Government many agencies prepare projections about particular sectors of the economy or industries with which they are

Federal Energy Administration Forecasts

Prior to creation of the Department of Energy, long-term Federal Energy Administration (FEA) projections were made through the Project Independence Evaluation System (PIES). This system generated planning estimates depicting possible states of the energy system. The model was used in two ways: (1) to help the Administrator of FEA in his policy role by analyzing the impact of various energy policies and (2) to develop a set of projections of what

energy picture will be in the future. The principal result of PIES is the determination of equilibrium prices and quantities of energy by type and region at specified future time points, based on specified alternative energy policies.

[blocks in formation]

s It should be noted that the President's Budget for FY 1977 contains no funds or personnel for the SEAS project.

« PreviousContinue »