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3.2 Risk profiles for the different scenarios

Figure 6: Risk profile impact for each scenario
Figure 6: Risk profile impact for each scenario.

The modified risk profiles (blue curve) show the expected impact of each of the social investment scenarios, compared with the original risk distribution (grey curve):

1. The Minimise childhood vulnerability scenariotargets services to those children and young people at highest risk of long-term unemployment and poor criminal justice outcomes. We create a benchmark where the risk profile is “translated” across the horizontal axis. This means that the risks for those identified as at the highest risk (100th to 95th percentiles) are reduced and now reflect the next level of risk (ie, the 94th to 90th percentiles). All other risk levels are similarly translated across.

2. The Equitable Māori outcomes scenario focuses on attempting to deliver services for Māori with fiscal and non-fiscal benefits so that Māori experience the same outcomes as the rest of the population. For modelling purposes we assign to Māori the levels of risk that are currently observed by the non-Māori population.

3. The Broader investment in human capital scenario focuses on policies to improve the health and educational components of human capital. Its results are based on the assumption that improved health and educational services could lead to higher labour market participation without reducing overall productivity. The long-term fiscal modelling uses a variety of approaches to capture the different aspects of this scenario. The IDI analysis provided estimates of the impact of higher levels of NCEA attainment at levels 2 and 3. This is modelled by looking at the risk levels associated with each level of NCEA attainment in the 1993 cohort and re-weighting the overall risk profile to reflect the new target NCEA attainment levels.

4. The Regional convergence scenariofocuses on closing the gap in outcomes between people living in the regions with those living in Auckland, Christchurch and Wellington. For modelling purposes the benchmark profile reflects the current risk profile of these three largest urban areas.

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