The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs

Abstract

The literature on treatment effects focuses on gross benefits from program participation. We extend this literature by developing conditions under which it is possible to identify parameters measuring the cost and net surplus from program participation. Using the generalized Roy model, we nonparametrically identify the cost, benefit, and net surplus of selection into treatment without requiring the analyst to have direct information on the cost. We apply our methodology to estimate the gross benefit and net surplus of attending college.

Goals and Gaps: Educational Careers of Immigrant Children

“…Elective affinity in soft skills may ease the diffusion of positive spillover effects of the program through friendship network (Rapallini and Rustichini, 2016). present conservative estimates focusing our cost-benefit analysis only on social benefits coming from higher income taxes and public savings on unemployment insurance (Heckman et al, 2010;Eisenhauer et al, 2015). We examine the sensitivity of social rates of returns to a plausible range of assumptions.…”

Effects of Expanding Health Screening on Treatment - What Should We Expect? What Can We Learn?

“…Anticipated costs and benefits of health care can differ across individuals, influencing individuals' willingness to seek care (Egan and Philipson, 2014;Eisenhauer et al, 2010;Heckman, 2010). This premise underlies commonly used public health models such as the health belief model.…”

“…3 It follows that anticipated net benefits of particular health services can vary across individuals (Vanness and Mullahy, 2012). In certain cases, distributions of these individual-level net benefits can be estimated (Basu and Heckman, 2007;Carneiro et al, 2010;Eisenhauer et al, 2010). These distributions are useful because changes to out-ofpocket costs of health care will attract different patients to treatment, depending on their anticipated cost and benefit (Basu and Meltzer, 2007;Goldman and Philipson, 2007;Pauly and Blavin, 2008).…”

“…For evidence on screening, seeHyman et al (1994);Lostao et al (2001); Oster et al(2013); Wilson (2011). For a discussion of self-selection into treatment and related econometric approaches, see, e.g.,Carneiro et al (2010);Eisenhauer et al (2010);Heckman (2010).…”

Extremal quantile regressions for selection models and the black–white wage gap

“…ensuring (2.4) Heckman & Vytlacil, 2007, Eisenhauer et al , 2013 with two or more sectors. Let Y * s denote the potential outcome corresponding to sector s ∈ {1, ..., S}, we suppose that…”