The Network Propensity Score: Spillovers, Homophily, and Selection into Treatment

Abstract: I establish primitive conditions for unconfoundedness in a coherent model that features heterogeneous treatment effects, spillovers, selection-on-observables, and network formation. I identify average partial effects under minimal exchangeability conditions. If social interactions are also anonymous, I derive a three-dimensional network propensity score, characterize its support conditions, relate it to recent work on network pseudo-metrics, and study extensions. I propose a two-step semiparametric estimator for a random coefficients model which is consistent and asymptotically normal as the number and size of the networks grows. I apply my estimator to a political participation intervention Uganda and a microfinance application in India.