Testing Monotonicity of Mean Potential Outcomes in a Continuous Treatment with High-Dimensional Data

Yu-Chin Hsu, Martin Huber, Ying-Ying Lee and Chu-An Liu

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Abstract: While most treatment evaluations focus on binary interventions, a growing literature also considers continuously distributed treatments. We propose a Cram\'{e}r-von Mises-type test for testing whether the mean potential outcome given a specific treatment has a weakly monotonic relationship with the treatment dose under a weak unconfoundedness assumption. In a nonseparable structural model, applying our method amounts to testing monotonicity of the average structural function in the continuous treatment of interest. To flexibly control for a possibly high-dimensional set of covariates in our testing approach, we propose a double debiased machine learning estimator that accounts for covariates in a data-driven way. We show that the proposed test controls asymptotic size and is consistent against any fixed alternative. These theoretical findings are supported by the Monte-Carlo simulations. As an empirical illustration, we apply our test to the Job Corps study and reject a weakly negative relationship between the treatment (hours in academic and vocational training) and labor market performance among relatively low treatment values.

Date: 2021-06, Revised 2022-08
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