Title

Inference on Optimal Treatment Assignments

Document Type

Discussion Paper

Publication Date

11-1-2013

CFDP Number

1927

CFDP Pages

32

Abstract

We consider inference on optimal treatment assignments. Our methods are the first to allow for inference on the treatment assignment rule that would be optimal given knowledge of the population treatment effect in a general setting. The procedure uses multiple hypothesis testing methods to determine a subset of the population for which assignment to treatment can be determined to be optimal after conditioning on all available information, with a prespecified level of confidence. A monte carlo study confirms that the procedure has good small sample behavior. We apply the method to the Mexican conditional cash transfer program Progresa. We demonstrate how the method can be used to design efficient welfare programs by selecting the right beneficiaries and statistically quantifying how strong the evidence is in favor of treating these selected individuals.

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