Skip to content

Who should be treated? Empirical welfare maximization methods for treatment choice

Research output: Contribution to journalArticle

Original languageEnglish
Pages (from-to)591-616
Number of pages26
JournalEconometrica
Volume86
Issue number2
DOIs
DateAccepted/In press - 29 Nov 2017
DatePublished (current) - 31 Mar 2018

Abstract

One of the main objectives of empirical analysis of experiments and quasi-experiments is to inform policy decisions that determine the allocation of treatments to individuals with different observable covariates. We study the properties and implementation of the Empirical Welfare Maximization (EWM) method, which estimates a treatment assignment policy by maximizing the sample analog of average social welfare over a class of candidate treatment policies. The EWM approach is attractive in terms of both statistical performance and practical implementation in realistic settings of policy design. Common features of these settings include: (i) feasible treatment assignment rules are constrained exogenously for ethical, legislative, or political reasons, (ii) a policy maker wants a simple treatment assignment rule based on one or more
eligibility scores in order to reduce the dimensionality of individual observable characteristics, and/or (iii) the proportion of individuals who can receive the treatment is a priori limited due to a budget or a capacity constraint. We show that when the propensity score is known, the average social welfare attained by EWM rules converges at least at n1/2 rate to the maximum obtainable welfare uniformly over a minimally constrained class of data distributions, and this
uniform convergence rate is minimax optimal. We examine how the uniform convergence rate depends on the richness of the class of candidate decision rules, the distribution of conditional treatment effects, and the lack of knowledge of the propensity score. We offer easily implementable algorithms for computing the EWM rule and an application using experimental data from the National JTPA Study.

Download statistics

No data available

Documents

Documents

  • Full-text PDF (accepted author manuscript)

    Rights statement: This is the author accepted manuscript (AAM). The final published version (version of record) is available online via the Econometric Society at https://www.econometricsociety.org/publications/econometrica/2018/03/01/who-should-be-treated-empirical-welfare-maximization-methods. Please refer to any applicable terms of use of the publisher.

    Accepted author manuscript, 2 MB, PDF-document

DOI

View research connections

Related faculties, schools or groups