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Quantifying Threshold Manipulation in the Presence of Rounding: The Case of Lead Monitoring in US Drinking Water

Author

Listed:
  • Tihitina Andarge
  • Dalia Ghanem
  • David A. Keiser
  • Gabriel E. Lade

Abstract

Many laws and economic actions depend on thresholds. As a consequence, threshold manipulation is a common concern in a variety of settings. Existing methods for detecting and quantifying threshold manipulation assume a continuous counterfactual distribution absent manipulation. This assumption is violated in the presence of rounding, which is prevalent in many applications and distinct from manipulation. This paper develops methods for testing and quantifying threshold manipulation when rounding is a prominent feature of the data. We demonstrate the usefulness of our approach in an empirical application examining threshold manipulation in lead monitoring under the US Safe Drinking Water Act.

Suggested Citation

  • Tihitina Andarge & Dalia Ghanem & David A. Keiser & Gabriel E. Lade, 2025. "Quantifying Threshold Manipulation in the Presence of Rounding: The Case of Lead Monitoring in US Drinking Water," American Economic Review: Insights, American Economic Association, vol. 7(3), pages 285-305, September.
    • Handle: RePEc:aea:aerins:v:7:y:2025:i:3:p:285-305
    DOI: 10.1257/aeri.20240258
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    More about this item

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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