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The generalized Roy model and the cost-benefit analysis of social programs

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  • Eisenhauer, Philipp
  • Heckman, James J.
  • Vytlacil, Edward

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.

Suggested Citation

  • Eisenhauer, Philipp & Heckman, James J. & Vytlacil, Edward, 2014. "The generalized Roy model and the cost-benefit analysis of social programs," ZEW Discussion Papers 14-082, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:14082
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    References listed on IDEAS

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    More about this item

    Keywords

    Cost-Benefit Analysis; Treatment Effects; Returns and Costs to Education;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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