A Graph-Theoretic Approach to Randomization Tests of Causal Effects under General Interference

Abstract

AbstractInterference exists when a unit's outcome depends on another unit's treatment assignment. For example, intensive policing on one street could have a spillover effect on neighbouring streets. Classical randomization tests typically break down in this setting because many null hypotheses of interest are no longer sharp under interference. A promising alternative is to instead construct a conditional randomization test on a subset of units and assignments for which a given null hypothesis is sharp. Finding these subsets is challenging, however, and existing methods are limited to special cases or have limited power. In this paper, we propose valid and easy-to-implement randomization tests for a general class of null hypotheses under arbitrary interference between units. Our key idea is to represent the hypothesis of interest as a bipartite graph between units and assignments, and to find an appropriate biclique of this graph. Importantly, the null hypothesis is sharp within this biclique, enabling conditional randomization-based tests. We also connect the size of the biclique to statistical power. Moreover, we can apply off-the-shelf graph clustering methods to find such bicliques efficiently and at scale. We illustrate our approach in settings with clustered interference and show advantages over methods designed specifically for that setting. We then apply our method to a large-scale policing experiment in Medellín, Colombia, where interference has a spatial structure.