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Discussion Paper Details

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Title: Treatment Effects with Heterogeneous Externalities

Author(s): Tiziano Arduini, Eleonora Patacchini and Edoardo Rainone

Publication Date: June 2019

Keyword(s): Indirect Treatment E�ec, Program evaluation and Two-Stage Least Squares

Programme Area(s): Development Economics and Public Economics

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.

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Bibliographic Reference

Arduini, T, Patacchini, E and Rainone, E. 2019. 'Treatment Effects with Heterogeneous Externalities'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13781