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Prediction Policy Problems

Author

Listed:
  • Jon Kleinberg
  • Jens Ludwig
  • Sendhil Mullainathan
  • Ziad Obermeyer

Abstract

Most empirical policy work focuses on causal inference. We argue an important class of policy problems does not require causal inference but instead requires predictive inference. Solving these "prediction policy problems" requires more than simple regression techniques, since these are tuned to generating unbiased estimates of coefficients rather than minimizing prediction error. We argue that new developments in the field of "machine learning" are particularly useful for addressing these prediction problems. We use an example from health policy to illustrate the large potential social welfare gains from improved prediction.

Suggested Citation

  • Jon Kleinberg & Jens Ludwig & Sendhil Mullainathan & Ziad Obermeyer, 2015. "Prediction Policy Problems," American Economic Review, American Economic Association, vol. 105(5), pages 491-495, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:491-95
    Note: DOI: 10.1257/aer.p20151023
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    References listed on IDEAS

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    1. Jonah E. Rockoff & Brian A. Jacob & Thomas J. Kane & Douglas O. Staiger, 2011. "Can You Recognize an Effective Teacher When You Recruit One?," Education Finance and Policy, MIT Press, vol. 6(1), pages 43-74, January.
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    More about this item

    JEL classification:

    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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