A Framework for Separating Individual Treatment Effects from Spillover, Interaction, and General Equilibrium Effects

42 Pages Posted: 3 Apr 2017

See all articles by Martin Huber

Martin Huber

University of Fribourg

Andreas Steinmayr

University of Chicago - Harris School of Public Policy

Abstract

This paper suggests a causal framework for disentangling individual level treatment effects and interference effects, i.e., general equilibrium, spillover, or interaction effects related to treatment distribution. Thus, the framework allows for a relaxation of the Stable Unit Treatment Value Assumption (SUTVA), which assumes away any form of treatment-dependent interference between study participants. Instead, we permit interference effects within aggregate units, for example, regions or local labor markets, but need to rule out interference effects between these aggregate units.Borrowing notation from the causal mediation literature, we define a range of policy-relevant effects and formally discuss identification based on randomization, selection on observables, and difference-in-differences. We also present an application to a policy intervention extending unemployment benefit durations in selected regions of Austria that arguably affected ineligibles in treated regions through general equilibrium effects in local labor markets.

Keywords: treatment effect, general equilibrium effects, spillover effects, interaction effects, interference effects, inverse probability weighting, propensity score, mediation analysis, difference-in-differences

JEL Classification: C21, C31

Suggested Citation

Huber, Martin and Steinmayr, Andreas, A Framework for Separating Individual Treatment Effects from Spillover, Interaction, and General Equilibrium Effects. Available at SSRN: https://ssrn.com/abstract=2944570 or http://dx.doi.org/10.2139/ssrn.2944570

Martin Huber (Contact Author)

University of Fribourg ( email )

Bd de PĂ©rolles 90
Fribourg, Fribourg CH-1700
Switzerland

Andreas Steinmayr

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

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