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Bayesian Model Averaging For Propensity Score Matching In Tax Rebate

Author

Listed:
  • Riccardo Lucchetti

    (Dipartimento di Scienze Economiche e Sociali; Facolta' di Economia "Giorgio Fua'; Universita' Politecnica delle Marche)

  • Luca Pedini

    (Dipartimento di Scienze Economiche e Sociali; Facolta' di Economia "Giorgio Fua'; Universita' Politecnica delle Marche)

  • Claudia Pigini

    (Dipartimento di Scienze Economiche e Sociali; Facolta' di Economia "Giorgio Fua'; Universita' Politecnica delle Marche)

Abstract

Propensity Score Matching is a popular approach to evaluate treatment effects in observational studies. However, when building the underlying propensity score model practitioners often overlook the issue of model uncertainty and its consequences. We tackle this problem by Bayesian Model Averaging (BMA) with an application to the 2014 Italian tax credit reform (the so-called "Renzi bonus"). Model uncertainty has a great impact on the estimated treatment effects. BMA-based estimates point towards a significant effect of the rebate on food consumption only for liquidity constrained house- holds; conversely, model selection procedures sometimes produce results incompatible with the consumption smoothing hypothesis.

Suggested Citation

  • Riccardo Lucchetti & Luca Pedini & Claudia Pigini, 2021. "Bayesian Model Averaging For Propensity Score Matching In Tax Rebate," Working Papers 457, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    • Handle: RePEc:anc:wpaper:457
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    References listed on IDEAS

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    More about this item

    Keywords

    2014 Italian Tax Credit Reform; Bayesian Model Averaging; Model Uncertainty; Propensity Score Matching; Reversible Jump Markov Chain Monte Carlo; Tax Rebate Policies;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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