Skip to content

It’s 2020, the week before Budget day. The Chancellor is debating whether to allocate budget to support the emerging flying car industry, trying to understand the effects it will have on the economy, cities and health. She starts by stepping into the virtual reality (VR) policy simulator to compare noise levels between regular and flying cars. Next, she plays a newly-designed board game, in which citizens have to navigate a city where flying cars form part of the transport mix. She finally consults with the team running her regulatory sandbox, exploring safety and liability issues surrounding flying cars.

Policymakers are increasingly tasked with solving ever greater challenges, for example climate change, the future of jobs or even inequality. Simultaneously, unpredictable events like the election of Donald Trump or the Brexit referendum are hard for policymakers to adjust to with their current set of tools. However, these events are leading to profound changes in industrial strategy and international relations, directly impacting innovation and policy. All of this comes in addition to a context in which current regulations are no longer equipped to handle some of the new markets or business models that are emerging at an exponential speed.

Simulation, broadly defined as the imitation of a real-world process, system or actor for the purpose of experimentation, is now being used in more exciting and experimental ways than ever before. Until recently, it was mostly used by governments in disaster preparedness and through war games for better emergency planning and tactical preparation. The scope and reach of simulation for policy is now undoubtedly expanding, providing the much needed ‘safe space’ to experiment with new approaches. Here are three fields in which simulation shows great potential.

Simulation for policymaker training

There is a greater need for smarter, more inclusive and more dynamic ways of building the capability of policymakers. As a tool, simulation opens new perspectives to achieve this. In the first place, it can help build better networks and break silos, by emphasising the benefits of coordination and collaboration in the policymaking process. An Indian-Dutch collaboration produced the board game ₹ubbish! in which policymakers or citizens play the role of a waste collection centre manager. The game was designed to complement and support the implementation of a Bangalore-wide decentralised waste collection plan, highlighting the seriousness of the waste crisis in the city and the importance of collaboration between all stakeholders involved.

Simulation can also change perspectives, by bringing particular issues to the agenda. The Guardian’s first VR project 6x9, for example, uses the power of virtual reality to raise awareness around the psychological impact of solitary confinement on prisoners in the United States of America. An increasing number of people are left feeling disconnected from policy and decision-makers, and simulation-enabling technologies could help strengthen future policymakers’ empathy.

Simulation for thinking through future regulation

Anticipating the future implications of a new policy or an emerging technology is not easy. Regulation in particular has struggled to follow the pace of technological development, adopting reactive, rather than proactive approaches. Simulation has the potential to boost the way in which we think and plan for changes in our economy.

The development of regulatory sandboxes, particularly for new industries like fintech that challenge current frameworks, is a good example. The UK’s Financial Conduct Authority uses sandboxes that allow new products and services to be tested in close collaboration with policymakers, on the market, with real customers, while monitoring their potential regulatory implications.

Simulation for a better understanding of complexity

Innovation systems are complex, involving multiple stakeholders and interests. As a result, there is a need for more and better data to improve our understanding of the impact of policy interventions, or the true needs of their beneficiaries.

Agent-based modelling is used by Creative City Model to simulate the relationship between variables like urban mobility or land use regulation and their impact on the economic performance of cities and regions. At the same time, the National Infrastructure Commission has also announced it will give simulation a large role in its next nationwide infrastructure assessment and subsequent policy recommendations. This means policymakers will altogether have access to better data in the coming year, making the move to simulation as a policy tool more realistic.

What it means for innovation and policy

These examples illustrate the unique potential of simulation in the integration of greater experimentation, collaboration and flexibility in the policymaking process. Simulation also allows policymakers to better plan and account for uncertainty and unpredictability in the policies they design, making it the choicest innovation method to tackle crucial challenges like climate change, mental health or even the global refugee crisis.

The year 2018 will be crucial in the rise of simulation for innovation, with the coming together of three dimensions: better technology, data and a change in mindsets. There are myriad new possibilities for simulation opened by the development of new technologies, for example virtual reality. This is combined with the rise of big data and analytics that help us better understand innovation systems and develop more robust models for simulation. Finally, there is a noticeable change in mindsets too, with greater creativity in approaches to the design and implementation of policy.

We are very excited by the promise of simulation for the design and implementation of more efficient and more inclusive policy. It has a great potential to help policymakers make better informed decisions, through the benefits of safe experimentation and testing. This is why we predict that in 2018, simulation will go big…for real!

Illustration: Peter Grundy​