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Locally Robust Policy Learning: Inequality, Inequality of Opportunity and Intergenerational Mobility

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  • Joel Terschuur

Abstract

Policy makers need to decide whether to treat or not to treat heterogeneous individuals. The optimal treatment choice depends on the welfare function that the policy maker has in mind and it is referred to as the policy learning problem. I study a general setting for policy learning with semiparametric Social Welfare Functions (SWFs) that can be estimated by locally robust/orthogonal moments based on U-statistics. This rich class of SWFs substantially expands the setting in Athey and Wager (2021) and accommodates a wider range of distributional preferences. Three main applications of the general theory motivate the paper: (i) Inequality aware SWFs, (ii) Inequality of Opportunity aware SWFs and (iii) Intergenerational Mobility SWFs. I use the Panel Study of Income Dynamics (PSID) to assess the effect of attending preschool on adult earnings and estimate optimal policy rules based on parental years of education and parental income.

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  • Joel Terschuur, 2025. "Locally Robust Policy Learning: Inequality, Inequality of Opportunity and Intergenerational Mobility," Papers 2502.13868, arXiv.org.
    • Handle: RePEc:arx:papers:2502.13868
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    References listed on IDEAS

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    1. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
    2. Margherita Fort & Andrea Ichino & Giulio Zanella, 2020. "Cognitive and Noncognitive Costs of Day Care at Age 0–2 for Children in Advantaged Families," Journal of Political Economy, University of Chicago Press, vol. 128(1), pages 158-205.
    3. Toru Kitagawa & Aleksey Tetenov, 2018. "Who Should Be Treated? Empirical Welfare Maximization Methods for Treatment Choice," Econometrica, Econometric Society, vol. 86(2), pages 591-616, March.
    4. Tetenov, Aleksey, 2012. "Statistical treatment choice based on asymmetric minimax regret criteria," Journal of Econometrics, Elsevier, vol. 166(1), pages 157-165.
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