Treatment Effects with Heterogeneous Externalities

36 Pages Posted: 11 Jun 2019 Last revised: 29 Jul 2019

See all articles by Tiziano Arduini

Tiziano Arduini

University of Bologna-Department of Economics

Eleonora Patacchini

Cornell University

Edoardo Rainone

Bank of Italy

Date Written: June 2019

Abstract

This paper proposes a new method for estimating heterogeneous externalities in policy analysis when social interactions take the linear-in-means form. We establish that the parameters of interest can be identified and consistently estimated using specific functions of the share of the eligible population. We also study the finite sample performance of the proposed estimators using Monte Carlo simulations. The method is illustrated using data on the PROGRESA program. We find that more than 50 percent of the effects of the program on schooling attendance are due to externalities, which are heterogeneous within and between poor and nonpoor households.

Keywords: Indirect Treatment E�ec, Program evaluation, Two-Stage Least Squares

JEL Classification: C13, C21, D62

Suggested Citation

Arduini, Tiziano and Patacchini, Eleonora and Rainone, Edoardo, Treatment Effects with Heterogeneous Externalities (June 2019). CEPR Discussion Paper No. DP13781. Available at SSRN: https://ssrn.com/abstract=3401868

Tiziano Arduini (Contact Author)

University of Bologna-Department of Economics ( email )

Piazzale Scaravilli 2
Bologna, 40126
Italy

HOME PAGE: http://https://sites.google.com/site/tizianoarduini/

Eleonora Patacchini

Cornell University ( email )

Ithaca, NY 14853
United States

Edoardo Rainone

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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