Subgroup Analysis via Recursive Partitioning

20 Pages Posted: 12 Feb 2009

See all articles by Xiaogang Su

Xiaogang Su

University of Central Florida

Chih-Ling Tsai

University of California, Davis - Graduate School of Management

Hansheng Wang

Peking University - Guanghua School of Management

David M. Nickerson

University of Central Florida

Bogong Li

United States Bureau of Labor Statistics

Date Written: February, 11 2009

Abstract

Subgroup analysis is an integral part of comparative analysis where assessing the treatment effect on a response is of central interest. Its goal is to determine the heterogeneity of the treatment effect across subpopulations. In this paper, we adapt the idea of recursive partitioning and introduce an interaction tree (IT) procedure to conduct subgroup analysis. The IT procedure automatically facilitates a number of objectively defined subgroups, in some of which the treatment effect is found prominent while in others the treatment has a negligible or even negative effect. The standard CART (Breiman et al., 1984) methodology is inherited to construct the tree structure. Also, in order to extract factors that contribute to the heterogeneity of the treatment effect, variable importance measure is made available via random forests of the interaction trees. Both simulated experiments and analysis of census wage data are presented for illustration.

Keywords: CART, Interaction, Subgroup Analysis, Random Forests

JEL Classification: C10, C19

Suggested Citation

Su, Xiaogang and Tsai, Chih-Ling and Wang, Hansheng and Nickerson, David M. and Li, Bogong, Subgroup Analysis via Recursive Partitioning (February, 11 2009). UC Davis Graduate School of Management Research Paper No. 12-09. Available at SSRN: https://ssrn.com/abstract=1341380 or http://dx.doi.org/10.2139/ssrn.1341380

Xiaogang Su

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Chih-Ling Tsai

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

Hansheng Wang (Contact Author)

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

HOME PAGE: http://hansheng.gsm.pku.edu.cn

David M. Nickerson

University of Central Florida ( email )

4000 Central Florida Blvd
Orlando, FL 32816-1400
United States

Bogong Li

United States Bureau of Labor Statistics ( email )

2 Massachusetts Avenue, NE
Washington, DC 20212
United States

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