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Identification of treatment response with social interactions

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  • Charles Manski

    ()
    (Institute for Fiscal Studies and Northwestern University)

Abstract

This paper develops a formal language for study of treatment response with social interactions, and uses it to obtain new findings on identification of potential outcome distributions. Defining a person's treatment response to be a function of the entire vector of treatments received by the population, I study identification when shape restrictions and distributional assumptions are placed on response functions. An early key result is that the traditional assumption of individualistic treatment response (ITR) is a polar case within the broad class of constant treatment response (CTR) assumptions, the other pole being unrestricted interactions. Important non-polar cases are interactions within reference groups and distributional interactions. I show that established findings on identification under assumption ITR extend to assumption CTR. These include identification with assumption CTR alone and when this shape restriction is strengthened to semi-monotone response. I next study distributional assumptions using instrumental variables. Findings obtained previously under assumption ITR extend when assumptions of statistical independence (SI) are posed in settings with social interactions. However, I find that random assignment of realized treatments generically has no identifying power when some persons are leaders who may affect outcomes throughout the population. Finally, I consider use of models of endogenous social interactions to derive restrictions on response functions. I emphasize that identification of potential outcome distributions differs from the longstanding econometric concern with identification of structural functions. This paper is a revised version of CWP01/10

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File URL: http://cemmap.ifs.org.uk/wps/cwp0110-2.pdf
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Bibliographic Info

Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP01/10.

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Date of creation: Feb 2010
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Handle: RePEc:ifs:cemmap:01/10

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Cited by:
  1. Noll, Daniel & Dawes, Colleen & Rai, Varun, 2014. "Solar Community Organizations and active peer effects in the adoption of residential PV," Energy Policy, Elsevier, vol. 67(C), pages 330-343.
  2. Lafférs, Lukáš, 2013. "A note on bounding average treatment effects," Economics Letters, Elsevier, vol. 120(3), pages 424-428.
  3. Kobayashi, Mimako & Melkonyan, Tigran A., 2011. "Strategic Incentives in Biosecurity Actions: Theoretical and Empirical Analyses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), August.

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