The Transfer Income Model (TRIM)

The Transfer Income Model, version 3 (TRIM3), is a comprehensive static microsimulation that is developed and maintained at the Urban Institute, with primary funding from the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation. TRIM3 simulates the major governmental tax, benefit, and health insurance programs that affect the US population. The programs modeled by TRIM3 fall into four categories:

  • cash transfer programs: Supplemental Security Income, Temporary Assistance to Needy Families (TANF), child support, and the Low Income Home Energy Assistance Program
  • in-kind transfer programs: child care subsidies (primarily through the Child Care and Development Fund), public and subsidized housing, the Supplemental Nutrition Assistance Program (SNAP), and the Special Supplemental Nutrition Program for Women, Infants, and Children
  • health insurance programs: Medicaid and CHIP, and employer-sponsored health insurance
  • tax programs: payroll taxes, federal income taxes (including credits), and state income taxes (including credits)

TRIM3 has four key uses. First, the model estimates the numbers of households, families, or people eligible for government safety net benefits; these eligibility estimates in turn allow estimation of program participation rates. Second, TRIM3 corrects for underreporting of benefits in survey data in order to provide a more complete picture of the current safety net. Third, TRIM3 can estimate the effects of hypothetical or proposed policies. Fourth, the model can analyze families’ economic well-being using an after-tax, after-transfer definition of resources. In particular, TRIM3 is used to compute poverty rates and gaps using expanded poverty measures such as the Supplemental Poverty Measure. Like other microsimulation models, TRIM3 can produce results at the individual, family, state, and national levels.

Some key features of TRIM3 are its detailed modeling of program rules, its ability to capture interactions across programs, and its ability to simulate many hypothetical scenarios. TRIM3’s simulations of government programs are extremely detailed, mimicking to the greatest extent possible a program’s actual rules concerning eligibility, definition of income, and computation of benefit or tax, and with extensive modeling of state variations. The model captures the details of individual programs along with the details of their interactions. Thus, if a change in the TANF program is modeled, that change will also affect a household’s simulated SNAP benefits and could affect a household’s child care subsidy. The model is heavily parameterized, allowing analysts to easily simulate a variety of hypothetical policies.

Since TRIM was first operational in 1973, the models have been in continuous use, analyzing the effects of current programs and the potential effects of changes to programs. For example, TRIM was used extensively in analysis of tax reform options in the 1980s and of both welfare reform and health reform in the 1990s. TRIM-based projects have included analyses related to immigrants’ receipt of public benefits, changes in TANF caseloads, the government “cost avoidance” attributable to child support payments, and the effect of federal income tax credits. Recently, TRIM3 has been used by poverty commissions and nonprofit organizations in several states to estimate the antipoverty effectiveness of possible changes to state policies.

TRIM3’s primary input data come from each year’s Current Population Survey, Annual Social and Economic supplement. For state-level poverty work, TRIM3 has been applied to data from the American Community Survey.

TRIM3 is a descendent of the first microsimulation model: the Reforms in Income Maintenance model, originally developed in 1969. The first Transfer Income Model was operational in 1973, and the second generation of TRIM (TRIM2) was introduced in 1980. TRIM3, which allows the public to easily access policy rules and simulation results over the Internet, was introduced in 1997.