Reduced-Rank Multi-objective Policy Learning and Optimization

TL;DR

This paper introduces a reduced-rank approach for multi-objective policy learning that denoises outcomes and improves decision-making in social interventions by capturing the true underlying effects in a low-dimensional space.

Contribution

It proposes a novel dimensionality-reduction methodology using reduced rank regression to enhance policy evaluation and optimization with multiple noisy outcomes.

Findings

Improved estimation error in policy evaluation.

Enhanced policy optimization performance.

Case study demonstrating benefits in social intervention data.

Abstract

Evaluating the causal impacts of possible interventions is crucial for informing decision-making, especially towards improving access to opportunity. However, if causal effects are heterogeneous and predictable from covariates, personalized treatment decisions can improve individual outcomes and contribute to both efficiency and equity. In practice, however, causal researchers do not have a single outcome in mind a priori and often collect multiple outcomes of interest that are noisy estimates of the true target of interest. For example, in government-assisted social benefit programs, policymakers collect many outcomes to understand the multidimensional nature of poverty. The ultimate goal is to learn an optimal treatment policy that in some sense maximizes multiple outcomes simultaneously. To address such issues, we present a data-driven dimensionality-reduction methodology for multiple outcomes in the context of optimal policy learning with multiple objectives. We learn a low-dimensional representation of the true outcome from the observed outcomes using reduced rank regression. We develop a suite of estimates that use the model to denoise observed outcomes, including commonly-used index weightings. These methods improve estimation error in policy evaluation and optimization, including on a case study of real-world cash transfer and social intervention data. Reducing the variance of noisy social outcomes can improve the performance of algorithmic allocations.