Graph Neural Networks: Theory for Estimation with Application on Network Heterogeneity

Abstract: This paper presents a novel application of graph neural networks for modeling and estimating network heterogeneity. Network heterogeneity is characterized by variations in unit's decisions or outcomes that depend not only on its own attributes but also on the conditions of its surrounding neighborhood. We delineate the convergence rate of the graph neural networks estimator, as well as its applicability in semiparametric causal inference with heterogeneous treatment effects. The finite-sample performance of our estimator is evaluated through Monte Carlo simulations. In an empirical setting related to microfinance program participation, we apply the new estimator to examine the average treatment effects and outcomes of counterfactual policies, and to propose an enhanced strategy for selecting the initial recipients of program information in social networks.