Optimal Treatment Assignment of a Threshold-based Policy: Empirical Protocol and Related Issues"

Abstract

In the footsteps of the recent literature on empirical welfare maximization, this paper wants to contribute by stressing the policymaker's empirical perspective and related issues arising when carrying out optimal policy assignment in practice. By focusing on the class of threshold-based policies, we first set out the theoretical underpinnings of the policymaker selection problem, to then offer a solution to this via an implementation protocol applied to the popular LaLonde (1986) training program database. The paper traces a general application procedure and discusses, in particular, problems of angle solution typically arising in real applications of optimal policy assignment.