Targeting Policies: Multiple Testing and Distributional Treatment Effects

32 Pages Posted: 9 Jan 2017

See all articles by Steven F. Lehrer

Steven F. Lehrer

Queen's University (Canada), Faculty of Arts & Science, Department of Economics, Students; National Bureau of Economic Research (NBER)

Vincent Pohl

Mathematica Policy Research, Washington, DC

Kyungchul Song

University of British Columbia (UBC) - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: Novemeber 2016

Abstract

Economic theory often predicts that treatment responses may depend on individuals’ characteristics and location on the outcome distribution. Policymakers need to account for such treatment effect heterogeneity in order to efficiently allocate resources to subgroups that can successfully be targeted by a policy. However, when interpreting treatment effects across subgroups and the outcome distribution, inference has to be adjusted for multiple hypothesis testing to avoid an overestimation of positive treatment effects. We propose six new tests for treatment effect heterogeneity that make corrections for the family-wise error rate and that identify subgroups and ranges of the outcome distribution exhibiting economically and statistically significant treatment effects. We apply these tests to individual responses to welfare reform and show that welfare recipients benefit from the reform in a smaller range of the earnings distribution than previously estimated. Our results shed new light on effectiveness of welfare reform and demonstrate the importance of correcting for multiple testing.

Keywords: Multiple Testing, Bootstrap Tests, Quantile Treatment Effects, Welfare Reform, Labor Supply

JEL Classification: C12, C21, I38, J22

Suggested Citation

Lehrer, Steven F. and Pohl, Vincent and Song, Kyungchul, Targeting Policies: Multiple Testing and Distributional Treatment Effects (Novemeber 2016). Available at SSRN: https://ssrn.com/abstract=2895032 or http://dx.doi.org/10.2139/ssrn.2895032

Steven F. Lehrer

Queen's University (Canada), Faculty of Arts & Science, Department of Economics, Students ( email )

99 University Avenue
Kingston, Ontario
Canada

HOME PAGE: http://econ.queensu.ca/faculty/lehrer/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vincent Pohl (Contact Author)

Mathematica Policy Research, Washington, DC ( email )

1100 1st Street, NE, 12th Floor
Washington, DC 20002-4221
United States

Kyungchul Song

University of British Columbia (UBC) - Department of Economics

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
29
Abstract Views
504
PlumX Metrics