An AI can simulate an economy millions of times to create fairer tax policy

Income inequality is one of the overarching problems of economics. One of the most effective tools policymakers have to address it is taxation: governments collect money from people according to what they earn and redistribute it either directly, via welfare schemes, or indirectly, by using it to pay for public projects. But though more taxation can lead to greater equality, taxing people too much can discourage them from working or motivate them to find ways to avoid paying—which reduces the overall pot.

Getting the balance right is not easy. Economists typically rely on assumptions that are hard to validate. People’s economic behavior is complex, and gathering data about it is hard. Decades of economic research has wrestled with designing the best tax policy, but it remains an open problem.

Scientists at the US business technology company Salesforce think AI can help. Led by Richard Socher, the team has developed a system called the AI Economist that uses reinforcement learning—the same sort of technique behind DeepMind’s AlphaGo and AlpahZero—to identify optimal tax policies for a simulated economy. The tool is still relatively simple (there’s no way it could include all the complexities of the real world or human behavior), but it is a promising first step toward evaluating policies in an entirely new way. “It would be amazing to make tax policy less political and more data driven,” says team member Alex Trott.

In one early result, the AI found a policy that—in terms of maximizing both productivity and income equality—was 16% fairer than a state-of-the-art progressive tax framework studied by academic economists. The improvement over current US policy was even greater. “I think it’s a totally interesting idea,” says Blake LeBaron at Brandeis University in Massachusetts, who has used neural networks to model financial markets.

In the simulation, four AI workers are each controlled by their own reinforcement-learning models. They interact with a two-dimensional world, gathering wood and stone and either trading these resources with others or using them to build houses, which earns them money. The workers have different levels of skill, which leads them to specialize. Lower-skilled workers learn they do better if they gather resources, and higher-skilled ones learn they do better if they buy resources to build houses. At the end of each simulated year, all workers are taxed at a rate devised by an AI-controlled policymaker, which is running its own reinforcement-learning algorithm. The policymaker’s goal is to boost both the productivity and the income of all workers. The AIs converge on optimal behavior by repeating the simulation millions of times.

Both reinforcement-learning models start from scratch, with no prior knowledge of economic theory, and learn how to act through trial and error—in much the same way that DeepMind’s AIs learn, with no human input, to play Go and StarCraft at superhuman levels.

Can you learn much from only four AI workers? In theory, yes, because simple interactions between a handful of agents soon lead to very complex behaviors. (For all its complexity, Go still involves only two players, for example.) Even so, everyone involved in the project agrees that increasing the number of workers in the simulation will be essential if the tool is to model realistic scenarios.

Gaming the system

The double dose of AI is key. Neural networks have been used to control agents in simulated economies before. But making the policymaker an AI as well leads to a model in which the workers and policymaker continually adapt to each other’s actions. This dynamic environment was a challenge for the reinforcement-learning models, since a strategy learned under one tax policy may not work so well under another. But it also meant the AIs found ways to game the system. For example, some workers learned to avoid tax by reducing their productivity to qualify for a lower tax bracket and then increasing it again. The Salesforce team says this give-and-take between workers and policymaker leads to a simulation more realistic than anything achieved by previous models, where tax policies are typically fixed.

The tax policy that the AI Economist came up with is a little unusual. Unlike most existing policies, which are either progressive (that is, higher earners are taxed more) or regressive (higher earners are taxed less), the AI’s policy cobbled together aspects of both, applying the highest tax rates to rich and poor and the lowest to middle-income workers. Like many solutions that AIs come up with—such as some of AlphaZero’s game-winning moves—the result appears counterintuitive and not something that a human might have devised. But its impact on the economy led to a smaller gap between rich and poor.

To see if the AI-generated tax policy would influence human behavior in a similar way, the team tested it on more than 100 crowdworkers hired through Amazon’s Mechanical Turk, who were asked to take control of the workers in the simulation. They found that the policy encouraged the humans to play in much the same way as the AIs, suggesting—at least in principle—that the AI Economist could be used to influence real economic activity.

Endless tweaking

Another advantage of an AI-powered simulation is that you can tweak parameters to explore different scenarios. For example, it would be possible to model the impact of a pandemic by adding constraints such as social distancing and restricted access to resources, or by removing people from the workforce. “It’s hard to come up with optimal tax theories based on the past if the future looks very different,” says Socher.

The ability of the simulation to model change is a big plus, says LeBaron: “It’s pretty interesting to see the workers adjusting themselves to the tax code.” This gets around one of the big criticisms of existing tax models in which behavior is typically fixed, he says.

LeBaron’s main reservation is the small number of agents the tool is limited to so far. “There are people who argue you can get deep intellectual insights with just a few agents,” he says. “I’m not one of them.” He would like to see it simulate around 100 workers—which is also a figure the Salesforce team is aiming for.

But LeBaron believes the tool could already be used to sanity-check existing economic models: “If I were a policymaker, I would fire this thing up to see what it says.” If the AI Economist disagreed with other models, then it could be a sign those other models were missing something, he says.

David Parkes, a computer scientist and economist at Harvard University who collaborated with the Salesforce team, is also optimistic. He agrees they need to increase the number of agents significantly. But once they have done that and added a few extra features such as companies to the simulation, he anticipates being able to replicate existing theoretical results. “Then it immediately becomes useful,” he says.

Doyne Farmer, an economist at the University of Oxford, is less convinced, however. Though he welcomes the crossover of reinforcement learning from games to economics—“It gets at the question of whether you can investigate policies in the same way that AlphaZero plays Go”—he thinks it will be some time before the tool is actually useful. “The real world is way too complicated,” he says.

The team accepts that some economists will need persuading. To that end, they are releasing their code and inviting others to run their own models through it. In the long run, this openness will also be an important part of making such tools trustworthy, says Socher. “If you are using an AI to recommend that certain people get lower or higher taxes,” he points out, ‘you’d better be able to say why.”


Original post:

67 comentários em “An AI can simulate an economy millions of times to create fairer tax policy

  1. It’s not my first time to pay a visit this web site, i am browsing this website
    dailly and obtain fastidious data from here daily.

  2. I do not even know how I ended up right here, however I believed this post was once great.
    I do not recognise who you might be however certainly you are going to a well-known blogger for
    those who aren’t already. Cheers!

  3. Excellent post. I was checking continuously this blog and I’m impressed!

    Extremely useful information particularly the last part 🙂 I
    care for such info a lot. I was seeking this
    certain information for a long time. Thank you and best of

  4. An impressive share! I have just forwarded this onto a friend who had been doing a
    little research on this. And he actually ordered me dinner due to the fact that I
    discovered it for him… lol. So allow me to reword this….
    Thank YOU for the meal!! But yeah, thanks for spending some time to talk about this issue here on your web page.

  5. This is really interesting, You are a very skilled blogger.
    I’ve joined your rss feed and look forward to seeking more of your wonderful post.
    Also, I have shared your site in my social networks!

  6. hello!,I like your writing so a lot! proportion we
    keep up a correspondence extra approximately your article on AOL?
    I need a specialist in this area to resolve my
    problem. May be that is you! Taking a look forward to see you.

  7. I am the co-founder of JustCBD label ( and am seeking to develop my wholesale side of company. I am hoping someone at targetdomain share some guidance . I thought that the very best way to accomplish this would be to connect to vape companies and cbd retail stores. I was hoping if anybody at all could recommend a qualified website where I can get CBD Shops B2B Sales Leads I am currently reviewing, and On the fence which one would be the best option and would appreciate any advice on this. Or would it be simpler for me to scrape my own leads? Suggestions?

  8. I am the manager of JustCBD Store brand ( and I am currently seeking to grow my wholesale side of business. I really hope that anybody at targetdomain give me some advice . I considered that the most effective way to accomplish this would be to reach out to vape shops and cbd stores. I was hoping if anybody at all could suggest a trustworthy web site where I can get USA Vape Shop Database with Vape Shop Contact Details I am presently looking at, and Not exactly sure which one would be the most ideal choice and would appreciate any support on this. Or would it be much simpler for me to scrape my own leads? Suggestions?

  9. Hello! I could have sworn I’ve visited this blog before but after going through many
    of the articles I realized it’s new to me. Nonetheless, I’m certainly pleased I discovered it and I’ll
    be bookmarking it and checking back regularly!

  10. Hi there! This is kind of off topic but I need some guidance from an established blog.
    Is it difficult to set up your own blog? I’m not very techincal but I can figure things out pretty quick.
    I’m thinking about setting up my own but I’m not sure where to start.
    Do you have any ideas or suggestions? Thank you

  11. Right here is the perfect web site for anybody who hopes to find out about this topic. You understand so much its almost tough to argue with you (not that I actually will need to…HaHa). You certainly put a new spin on a topic that has been discussed for years. Great stuff, just excellent!

  12. You made some good points there. I checked on the web for additional information about the issue and found most individuals will go along with your views on this web site.

  13. I think the admin of this site is actually working hard in support of his web page, for the reason that here
    every data is quality based data.

  14. We are a group of volunteers and starting a new scheme in our community.
    Your site offered us with valuable info to work on.
    You’ve done an impressive job and our whole community shall be thankful to you.

  15. I have been browsing online more than 4 hours today, yet I never found any interesting article like yours.
    It is pretty worth enough for me. In my opinion, if all
    web owners and bloggers made good content as
    you did, the internet will be much more useful than ever before.

    adreamoftrains best website hosting

  16. A motivating discussion is definitely worth comment. I believe that you should write more on this subject matter, it might not be a taboo subject but usually people do not discuss these topics. To the next! Cheers!!

  17. You’re so awesome! I don’t believe I have read a single thing like this before. So good to find another person with original thoughts on this subject. Seriously.. many thanks for starting this up. This web site is something that is needed on the web, someone with some originality!

  18. I’m impressed, I have to admit. Rarely do I come across a blog that’s both educative and interesting, and let me tell you, you have hit the nail on the head. The issue is something which too few folks are speaking intelligently about. I am very happy that I found this during my hunt for something relating to this.

  19. Achieving your fitness goals does not need a certified personal trainer or an expensive gym membership, especially when you have the budget and the space to consider practically every workout machine in the market.

  20. Everything is very open with a very clear explanation of the challenges. It was truly informative. Your website is extremely helpful. Thank you for sharing!

  21. I blog quite often and I seriously thank you for your information. Your article has really peaked my interest.
    I am going to book mark your blog and keep checking for
    new information about once a week. I opted in for your Feed as well.
    cheap flights y2yxvvfw

  22. You are so interesting! I do not suppose I have read something like that before. So nice to discover someone with some unique thoughts on this issue. Seriously.. thank you for starting this up. This site is one thing that’s needed on the web, someone with some originality!

  23. Please let me know if you’re looking for a writer for your weblog.
    You have some really great articles and I feel I would
    be a good asset. If you ever want to take some of the load off,
    I’d love to write some content for your blog in exchange for a link
    back to mine. Please send me an e-mail if interested. Cheers!

  24. After checking out a few of the blog articles on your web page, I truly like your technique of blogging. I added it to my bookmark webpage list and will be checking back in the near future. Please visit my website too and tell me what you think.

  25. Howdy! This post couldn’t be written much better! Looking through this article reminds me of my previous roommate! He constantly kept talking about this. I will send this article to him. Fairly certain he’s going to have a very good read. Thank you for sharing!

  26. Can I just say what a comfort to discover somebody that truly understands what they’re talking about on the net. You definitely understand how to bring a problem to light and make it important. A lot more people really need to look at this and understand this side of your story. I was surprised you’re not more popular since you surely have the gift.

  27. Having read this I believed it was extremely enlightening. I appreciate you finding the time and effort to put this content together. I once again find myself personally spending a significant amount of time both reading and posting comments. But so what, it was still worthwhile!

  28. Hi, I do think this is an excellent website. I stumbledupon it 😉 I am going to come back once again since I book marked it. Money and freedom is the best way to change, may you be rich and continue to guide others.

  29. Spot on with this write-up, I absolutely believe that this amazing site needs much more attention. I’ll probably be back again to read more, thanks for the advice!

  30. An interesting discussion is worth comment. There’s no doubt that that you ought to write more about this issue, it might not be a taboo matter but generally people do not speak about these topics. To the next! Cheers!!

  31. The next time I read a blog, Hopefully it won’t disappoint me just as much as this one. I mean, I know it was my choice to read, however I actually thought you would probably have something useful to talk about. All I hear is a bunch of complaining about something that you can fix if you weren’t too busy looking for attention.

Leave a Reply

Your email address will not be published. Required fields are marked *