Causal inference on networks under continuous treatment interference

Abstract

This paper investigates the case of interference, when a unit’s treatment also affects other units’ outcome. When interference is at work, policy evaluation mostly relies on the use of randomized experiments under cluster interference and binary treatment. Instead, we consider a non-experimental setting under continuous treatment and network interference. In particular, we define spillover effects by specifying the exposure to network treatment as a weighted average of the treatment received by units connected through physical, social or economic interactions. Building on Forastiere et al. (2021), we provide a generalized propensity score-based estimator to estimate both direct and spillover effects of a continuous treatment. Our estimator also allows to consider asymmetric network connections characterized by heterogeneous intensities. To showcase this methodology, we investigate whether and how spillover effects shape the optimal level of policy interventions in agricultural markets. Our results show that, in this context, neglecting interference may underestimate the degree of policy effectiveness.