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Partial Identification, Distributional Preferences, and the Welfare Ranking of Policies

Author

Listed:
  • Maximilian Kasy

    (Harvard University and IHS Vienna)

Abstract

We discuss the tension between “what we can get” (identification) and “what we want” (parameters of interest) in models of policy choice (treatment assignment). Our nonstandard empirical object of interest is the ranking of counterfactual policies. Partial identification of treatment effects maps into a partial welfare ranking of treatment assignment policies. We characterize the identified ranking and show how the identifiability of the ranking depends on identifying assumptions, the feasible policy set, and distributional preferences. An application to the project STAR experiment illustrates this dependence. This paper connects the literatures on partial identification, robust statistics, and choice under Knightian uncertainty.

Suggested Citation

  • Maximilian Kasy, 2016. "Partial Identification, Distributional Preferences, and the Welfare Ranking of Policies," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 111-131, March.
    • Handle: RePEc:tpr:restat:v:98:y:2016:i:1:p:111-131
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    Cited by:

    1. Juliano Assunção & Robert McMillan & Joshua Murphy & Eduardo Souza-Rodrigues, 2019. "Optimal Environmental Targeting in the Amazon Rainforest," NBER Working Papers 25636, National Bureau of Economic Research, Inc.
    2. Susan Athey & Stefan Wager, 2021. "Policy Learning With Observational Data," Econometrica, Econometric Society, vol. 89(1), pages 133-161, January.
    3. repec:bos:wpaper:wp2013-001 is not listed on IDEAS
    4. Yan Liu, 2022. "Policy Learning under Endogeneity Using Instrumental Variables," Papers 2206.09883, arXiv.org, revised Mar 2024.
    5. Epstein, Larry G. & Seo, Kyoungwon, 2015. "Exchangeable capacities, parameters and incomplete theories," Journal of Economic Theory, Elsevier, vol. 157(C), pages 879-917.
    6. Yuya Sasaki & Takuya Ura, 2020. "Welfare Analysis via Marginal Treatment Effects," Papers 2012.07624, arXiv.org.
    7. Takuya Ishihara & Toru Kitagawa, 2021. "Evidence Aggregation for Treatment Choice," Papers 2108.06473, arXiv.org.
    8. Julian Martinez-Iriarte & YiXiao Sun, 2022. "Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: an Unconditional MTE Approach," Working Papers 131, Red Nacional de Investigadores en Economía (RedNIE).
    9. Dahlstrand Rudin, Amanda, 2022. "Defying distance? The provision of services in the digital age," LSE Research Online Documents on Economics 118042, London School of Economics and Political Science, LSE Library.
    10. Firpo, Sergio & Galvao, Antonio F. & Kobus, Martyna & Parker, Thomas & Rosa-Dias, Pedro, 2020. "Loss Aversion and the Welfare Ranking of Policy Interventions," IZA Discussion Papers 13176, Institute of Labor Economics (IZA).
    11. Kohei Yata, 2021. "Optimal Decision Rules Under Partial Identification," Papers 2111.04926, arXiv.org, revised Aug 2023.
    12. Julian Martinez-Iriarte, 2023. "Sensitivity Analysis in Unconditional Quantile Effects," Papers 2303.14298, arXiv.org, revised Jun 2023.
    13. Stefano Caria & Grant Gordon & Maximilian Kasy & Simon Quinn & Soha Shami & Alexander Teytelboym, 2020. "An Adaptive Targeted Field Experiment: Job Search Assistance for Refugees in Jordan," CESifo Working Paper Series 8535, CESifo.
    14. Julian Martinez-Iriarte & Yixiao Sun, 2020. "Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: An Unconditional MTE Approach," Papers 2010.15864, arXiv.org, revised Mar 2024.
    15. Davide Viviano & Jess Rudder, 2020. "Policy design in experiments with unknown interference," Papers 2011.08174, arXiv.org, revised Dec 2023.
    16. Bulat Gafarov, 2019. "Simple subvector inference on sharp identified set in affine models," Papers 1904.00111, arXiv.org, revised Dec 2023.
    17. JoonHwan Cho & Thomas M. Russell, 2018. "Simple Inference on Functionals of Set-Identified Parameters Defined by Linear Moments," Papers 1810.03180, arXiv.org, revised May 2023.
    18. Toru Kitagawa & Hugo Lopez & Jeff Rowley, 2022. "Stochastic Treatment Choice with Empirical Welfare Updating," Papers 2211.01537, arXiv.org, revised Feb 2023.
    19. Semenova, Vira, 2023. "Debiased machine learning of set-identified linear models," Journal of Econometrics, Elsevier, vol. 235(2), pages 1725-1746.
    20. Yu-Chang Chen & Haitian Xie, 2022. "Personalized Subsidy Rules," Papers 2202.13545, arXiv.org, revised Mar 2022.
    21. Juliano Assuncao & Robert McMillan & Joshua Murphy & Eduardo Souza-Rodrigues, 2019. "Optimal Environmental Targeting in the Amazon Rainforest," Working Papers tecipa-631, University of Toronto, Department of Economics.
    22. Amanda Dahlstrand, 2022. "Defying distance? The provision of services in the digital age," CEP Discussion Papers dp1889, Centre for Economic Performance, LSE.
    23. Martínez-Iriarte, Julian & Sun, Yixiao, 2021. "Identification and Estimation of Unconditional Policy Effects of an Endogenous Binary Treatment: an Unconditional MTE Approach," University of California at San Diego, Economics Working Paper Series qt2bc57830, Department of Economics, UC San Diego.
    24. Thomas M. Russell, 2020. "Policy Transforms and Learning Optimal Policies," Papers 2012.11046, arXiv.org.

    More about this item

    Keywords

    Partial identification; ambiguity; distributional decompositions; robust statistics; treatment assignment;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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