Randomized Saturation Design for Network Spillovers

In Simple Words

Imagine dropping food packets into select households in different neighborhoods—some neighborhoods get food for 20% of homes, while others get food for 90% of homes. By varying the density of aid across distinct neighborhoods, researchers can measure how much neighbors share food with each other without confusing it with the direct effect on the recipients.

Research question

Evaluating active labor market policies without accounting for neighborhood social network spillovers can misestimate treatment impacts due to information sharing or local displacement among untreated peers.

Participants

N = 3,052 young job-seekers across 178 geographic clusters in Addis Ababa, Ethiopia.

Study Design

Randomized saturation design varying cluster-level treatment proportions (20%, 40%, 75%, and 90%) across geographic clusters located over 2.5 km from the city center.

Results

Moderate transport subsidy saturation (40%) generated positive indirect spillovers on untreated neighbors, raising formal employment by 6.2 percentage points (p < 0.10) and permanent employment by 6.4 percentage points (p < 0.05); high saturation (90%) produced negative spillovers on permanent work (-6.8 percentage points, p < 0.01).

Takeaway

Vary the geographic density of treatment assignment across intervention clusters to isolate indirect peer effects and social network information transmission from direct policy impacts.

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Plain-English glossary

Original explanations, informed by the references below. Examples are illustrations, not data from the studies above. The research text stays unchanged.

Percentage points

The difference between two percentages.

ExampleA rise from 40% to 50% is 10 percentage points. Relative to the starting value, that is a 25% increase.

Office for National Statistics · Percentages ↗Read more about percentage points →

Related findings

• Randomized Saturation Spillover Dynamics →Labour & employment

  Varying the percentage of treated individuals across neighborhood clusters tests whether helping one worker harms neighboring job-seekers. It operates like testing different concentrations of water purification in distinct villages to see if clean water in one household improves or restricts neighbor access.

• Displacement Externalities in Active Labor Market Programs →Labour & employment

  Imagine a crowded musical chairs game where some players are suddenly given fast running shoes. While those runners grab available chairs much faster, they bump into and push away the barefoot players, making it significantly harder for the non-runner players to find a seat.

• Double-Sided Randomization Design →Labour & employment

  Imagine a musical chairs game where organizers want to know if giving subsidized tickets to new players adds total active players or merely pushes out un-subsidized participants. By flipping a coin to select both which players receive subsidized tickets and which chairs host subsidized players, organizers can directly observe whether new total chairs are created or existing participants are displaced.

• Informal Network Substitution for Formal Reference Letters →Labour & employment

  Handing a prospective employer a written letter of recommendation is redundant when a trusted friend or colleague introduces the applicant directly. The direct word-of-mouth referral replaces the paper document, making the physical reference letter unnecessary during the hiring process.