An introduction to flexible methods for policy evaluation

Martin Huber

No 504, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

Abstract: This chapter covers different approaches to policy evaluation for assessing the causal effect of a treatment or intervention on an outcome of interest. As an introduction to causal inference, the discussion starts with the experimental evaluation of a randomized treatment. It then reviews evaluation methods based on selection on observables (assuming a quasi-random treatment given observed covariates), instrumental variables (inducing a quasi-random shift in the treatment), difference-in-differences and changes-in-changes (exploiting changes in outcomes over time), as well as regression discontinuities and kinks (using changes in the treatment assignment at some threshold of a running variable). The chapter discusses methods particularly suited for data with many observations for a flexible (i.e. semi- or nonparametric) modeling of treatment effects, and/or many (i.e. high dimensional) observed covariates by applying machine learning to select and control for covariates in a data-driven way. This is not only useful for tackling confounding by controlling for instance for factors jointly affecting the treatment and the outcome, but also for learning effect heterogeneities across subgroups defined upon observable covariates and optimally targeting those groups for which the treatment is most effective.

Keywords: Policy evaluation; treatment effects; machine learning; experiment; selection on observables; instrument; difference-indifferences; changes-in-changes; regression discontinuity design; regression kink design (search for similar items in EconPapers)
JEL-codes: C21 C26 C29 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2019-08-12
New Economics Papers: this item is included in nep-big, nep-cmp, nep-ecm, nep-exp and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: An introduction to flexible methods for policy evaluation (2019)
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