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Welfare Analysis in Dynamic Models

Victor Chernozhukov, Whitney Newey, Vira Semenova

arXiv 24 Aug 2019 · Statistics — Machine Learning · 2 citations (OpenAlex)

arXiv:1908.09173 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper introduces metrics for welfare analysis in dynamic models. We develop estimation and inference for these parameters even in the presence of a high-dimensional state space. Examples of welfare metrics include average welfare, average marginal welfare effects, and welfare decompositions into direct and indirect effects similar to Oaxaca (1973) and Blinder (1973). We derive dual and doubly robust representations of welfare metrics that facilitate debiased inference. For average welfare, the value function does not have to be estimated. In general, debiasing can be applied to any estimator of the value function, including neural nets, random forests, Lasso, boosting, and other high-dimensional methods. In particular, we derive Lasso and Neural Network estimators of the value function and associated dynamic dual representation and establish associated mean square convergence rates for these functions. Debiasing is automatic in the sense that it only requires knowledge of the welfare metric of interest, not the form of bias correction. The proposed methods are applied to estimate a dynamic behavioral model of teacher absenteeism in \cite{DHR} and associated average teacher welfare.

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65
references
167
in-text mentions
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distinct cited
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Duflo, E., R. Hanna, and S. P. Ryan (2012, June) (2012) Incentives work: Getting teachers to come to school0.98219895%
2Hotz, J. and R. Miller (1993) Conditional choice probabilities and the estimation of dynamic models0.92810580%
3Blinder, A. S (1973) Wage discrimination: Reduced form and structural estimates0.92843100%
4Oaxaca, R (1973) Male-female wage differentials in urban labor markets0.92843100%
5Rust, J (1987) Optimal replacement of gmc bus engines: An empirical model of harold zurcher0.9098675%
6Aguirregabiria, V. and P. Mira (2002) Swapping the nested fixed point algorithm: A class of estimators for discrete markov decision models0.8749567%
7Chernozhukov, V., W. K. Newey, and R. Singh (2022, May) (2022) Automatic debiased machine learning of causal and structural effects self0.8558462%
8Adusumilli, K. and D. Eckardt (2019) Temporal-difference estimation of dynamic choice models0.8435360%
9Chernozhukov, V., W. K. Newey, V. Quintas-Martinez, and V. Syrgkanis (2024) Automatic debiased machine learning via riesz regression self0.7948550%
10Chernozhukov, V., J. C. Escanciano, H. Ichimura, W. K. Newey, and J.… (2022) Locally Robust Semiparametric Estimation self0.7639544%

Showing the top 10 of 65 scored citations.