Welfare at Risk: Distributionally Robust Bounds for Policy Evaluation
This paper develops a framework to study how the welfare effects of policy interventions are distributed across individuals when those effects are not directly observed. We bound the superquantile of individual welfare changes by the superquantile of conditional average welfare changes, which is typically identified, revealing how gains and losses are spread across the population. We also bound the share of the population whose welfare loss from the policy exceeds any given threshold --- a distribution-free counterpart to average cost--benefit analysis, closer to a poverty-rate measure of policy harm than to a mean welfare effect. We further extend both bounds to allow for ambiguity in the analyst's knowledge of the distribution of observable characteristics: a non-robust bound estimated on one population can be systematically overoptimistic when applied to a different target population, while the robust version, with its ambiguity radius chosen commensurate with the shift, restores a valid guarantee. We illustrate the method in generalized Roy models with subjective participation costs, bounding not only the distribution of welfare changes in the overall population but also, in a result new to this literature, the entire distribution of welfare (and of participation costs) among those who select into treatment --- the treatment-on-the-treated distribution, not merely its mean. We connect these results to the multi-outcome IV framework of \cite{Heckman_Urzua_Vytlacil_2006_REStat}, showing our robust bounds are immune to the instrument-sensitivity problem they document