Use of Monte Carlo simulation for the public sector: an evidence-based approach to scenario planning

Roberto Foa and Melanie Howard

This paper describes a statistical methodology that can be deployed in order to conduct evidence-based scenario planning.
  

Use of Monte Carlo Simulation for the Public Sector

An Evidence-based Approach to Scenario Planning

Roberto FoaUniversity of Michigan at Ann Arbor

Melanie HowardThe Future Foundation

INTRODUCTION: THE CASE FOR MONTE CARLO METHODS

As a methodology for facilitating strategic decisions, scenario planning has risen to prominence in the last decade, as policy-makers struggle to prepare in advance of proven contingencies such as terrorism, sharp asset price adjustments or natural disasters like the hurricanes that have recently ravaged the US Gulf Coast (Schwartz 1996; van der Heijden 1996). Unlike linear attempts to forecast the future based on...

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