The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs
50 Pages Posted: 4 Nov 2014
Date Written: September 28, 2014
The literature on treatment effects focuses on gross benefits from program participation. We extend this literature by developing conditions under which it is possible to identify parameters measuring the cost and net surplus from program participation. Using the generalized Roy model, we nonparametrically identify the cost, benefit, and net surplus of selection into treatment without requiring the analyst to have direct information on the cost. We apply our methodology to estimate the gross benefit and net surplus of attending college.
Keywords: Cost-Benefit Analysis, Treatment Effects, Returns and Costs to Education
JEL Classification: I21, C31, C32
Suggested Citation: Suggested Citation