The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs

50 Pages Posted: 4 Nov 2014

See all articles by Philipp Eisenhauer

Philipp Eisenhauer

ZEW – Leibniz Centre for European Economic Research; University of Mannheim - Center for Doctoral Studies in Economics and Management (CDSEM)

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)

Date Written: September 28, 2014

Abstract

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

Eisenhauer, Philipp and Heckman, James J. and Vytlacil, Edward J., The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs (September 28, 2014). ZEW - Centre for European Economic Research Discussion Paper No. 14-082. Available at SSRN: https://ssrn.com/abstract=2518372 or http://dx.doi.org/10.2139/ssrn.2518372

Philipp Eisenhauer (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

University of Mannheim - Center for Doctoral Studies in Economics and Management (CDSEM) ( email )

Mannheim, D-68131
Germany

James J. Heckman

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States
773-702-0634 (Phone)
773-702-8490 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

American Bar Foundation

750 N. Lake Shore Drive
Chicago, IL 60611
United States

Institute for the Study of Labor (IZA)

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

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
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

Register to save articles to
your library

Register

Paper statistics

Downloads
72
Abstract Views
476
rank
322,164
PlumX Metrics