Up-rating devolved Social Security assistance: multi criteria decision analysis - January 2024

Annex C: Sensitivity Analysis

1. Sensitivity analysis examines how different preferences can impact the scoring of options and is therefore an integral part of undertaking a robust Multi Criteria Decision Analysis.

2. The weighting and scoring applied to each category and across each option can be subjective. The equal weighting reflects the importance that each criteria selected is satisfied. Several different weightings have been applied to each criteria below and in each case the preferred option remains the same. Examples 1 and 2 are provided in the next pages.

3. Example 3 demonstrates different scores applied across criteria where scoring decisions were marginal, but keeping original criteria weighting and again, the preferred option remains the same.

4. Sensitivity analysis was also undertaken to understand how changes in circumstance may alter the scoring of options for each criteria. For example, if January CPI could be provided earlier and allowed enough time to be included in budget process and uprating process then this option would score higher on delivery, and could change the results. Similarly if forecasts were available for CPIH then options including CPIH this would score higher on delivery because it would enable robust financial planning. However, neither of these changes in circumstance are deemed realistic or likely so were not scored specifically.

5. It was considered that reference periods later than September but earlier than January might score differently (e.g. October, November, December). However, since inflation has fallen consistently over that time, each of those months had a lower inflation rate than the January forecast, and so would result in a real terms value loss for benefit clients similar to January as shown in Annex A. Therefore it was judged an October, November or December period would not score higher than September as they would score no higher on relevance but likely receive a lower score for delivery.

6. The factors which influence our decision also constrain the available options. Other options not currently available can be considered too as part of the sensitivity analysis. An example of this is if legislation was changed and was not explicit about using relevant prices to measure inflation then we could consider earnings inflation as a metric to include within the options. However, current legislation does include this requirement.

Example 1.

• This was selected as transparency could be considered as the least important of all criterion.

Example 2.

• This was selected because the score for Robustness and Delivery showed the most variation across options so is particularly important in determining final scores.

Example 3 (original equal weighting).

• For Robustness, options G and H could be scored a 3 rather than 4, to further reflect the difference between experimental and national statistics.
• For Relevance, to reflect the increased relevance of a period closer to the time of uprating (e.g. January rather than September), options B and F could be scored a 4 rather than 3.
• For Delivery considerations, option E could be scored a 3 rather than 4 to further reflect the disadvantages in not having forecasts.
• For Transparency, option D could be scored a 2 rather than 3, to further reflect the difference in transparency of an option undertaking an internal calculation compared with an option using headline inflation metrics.