Bounds on functionals of the distribution treatment effects

Sergio Firpo and Geert Ridder

No 201, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: Bounds on the distribution function of the sum of two random variables with known marginal distributions obtained by Makarov (1981) can be used to bound the cumulative distribution function (c.d.f.) of individual treatment effects. Identification of the distribution of individual treatment effects is important for policy purposes if we are interested in functionals of that distribution, such as the proportion of individuals who gain from the treatment and the expected gain from the treatment for these individuals. Makarov bounds on the c.d.f. of the individual treatment effect distribution are pointwise sharp, i.e. they cannot be improved in any single point of the distribution. We show that the Makarov bounds are not uniformly sharp. Specifically, we show that the Makarov bounds on the region that contains the c.d.f. of the treatment effect distribution in two (or more) points can be improved, and we derive the smallest set for the c.d.f. of the treatment effect distribution in two (or more) points. An implication is that the Makarov bounds on a functional of the c.d.f. of the individual treatment effect distribution are not best possible.

Date: 2010-06-01
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (9)

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