No. 1158 - Targeting policy-compliers with machine learning: an application to a tax rebate programme in Italy

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by Monica Andini, Emanuele Ciani, Guido de Blasio, Alessio D'Ignazio and Viola Salvestrini December 2017

Machine Learning (ML) can be a powerful tool to inform policy decisions. Those who are treated under a programme might have different propensities to put into practice the behaviour that the policymaker wants to incentivize. ML algorithms can be used to predict the policy-compliers; that is, those who are most likely to behave in the way desired by the policymaker.

When the design of the programme is tailored to target the policy-compliers, the overall effectiveness of the policy is increased. This paper proposes an application of ML targeting that uses the massive tax rebate scheme introduced in Italy in 2014.