Demand and Welfare Analysis in Discrete Choice Models with Social Interactions

• 成果类型: Article
• 署名作者: Bhattacharya, Debopam; Dupas, Pascaline; Kanaya, Shin
• 署名单位: University of Cambridge; Stanford University; University of Essex; Kyoto University
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdad053
• 发表日期: 2024
• 页码: 748-784
• 关键词: nonlinear panel models; identification; probabilities

摘要

Many real-life settings of individual choice involve social interactions, causing targeted policies to have spillover effects. This article develops novel empirical tools for analysing demand and welfare effects of policy interventions in binary choice settings with social interactions. Examples include subsidies for health-product adoption and vouchers for attending a high-achieving school. We show that even with fully parametric specifications and unique equilibrium, choice data, that are sufficient for counterfactual demand prediction under interactions, are insufficient for welfare calculations. This is because distinct underlying mechanisms producing the same interaction coefficient can imply different welfare effects and deadweight-loss from a policy intervention. Standard index restrictions imply distribution-free bounds on welfare. We propose ways to identify and consistently estimate the structural parameters and welfare bounds allowing for unobserved group effects that are potentially correlated with observables and are possibly unbounded. We illustrate our results using experimental data on mosquito-net adoption in rural Kenya.