Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin

22 Pages Posted: 11 Aug 2009 Last revised: 26 Jul 2010

See all articles by Pedro Manuel Carneiro

Pedro Manuel Carneiro

University College London - Department of Economics; IZA Institute of Labor Economics

James J. Heckman

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Edward Vytlacil

Yale University - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: August 2009

Abstract

This paper develops methods for evaluating marginal policy changes. We characterize how the effects of marginal policy changes depend on the direction of the policy change, and show that marginal policy effects are fundamentally easier to identify and to estimate than conventional treatment parameters. We develop the connection between marginal policy effects and the average effect of treatment for persons on the margin of indifference between participation in treatment and nonparticipation, and use this connection to analyze both parameters. We apply our analysis to estimate the effect of marginal changes in tuition on the return to going to college.

Suggested Citation

Carneiro, Pedro Manuel and Heckman, James J. and Vytlacil, Edward J., Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin (August 2009). NBER Working Paper No. w15211. Available at SSRN: https://ssrn.com/abstract=1444713

Pedro Manuel Carneiro

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

James J. Heckman (Contact Author)

University of Chicago - Department of Economics ( email )

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Chicago, IL 60637
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773-702-0634 (Phone)
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National Bureau of Economic Research (NBER)

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American Bar Foundation

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Institute for the Study of Labor (IZA)

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Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

Edward J. Vytlacil

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8281
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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