Regression Discontinuity Design with Spillovers (2404.06471v1)

Abstract: Researchers who estimate treatment effects using a regression discontinuity design (RDD) typically assume that there are no spillovers between the treated and control units. This may be unrealistic. We characterize the estimand of RDD in a setting where spillovers occur between units that are close in their values of the running variable. Under the assumption that spillovers are linear-in-means, we show that the estimand depends on the ratio of two terms: (1) the radius over which spillovers occur and (2) the choice of bandwidth used for the local linear regression. Specifically, RDD estimates direct treatment effect when radius is of larger order than the bandwidth, and total treatment effect when radius is of smaller order than the bandwidth. In the more realistic regime where radius is of similar order as the bandwidth, the RDD estimand is a mix of the above effects. To recover direct and spillover effects, we propose incorporating estimated spillover terms into local linear regression -- the local analog of peer effects regression. We also clarify the settings under which the donut-hole RD is able to eliminate the effects of spillovers.