Targeting with machine learning: An application to a tax rebate program in Italy

This paper shows how machine learning (ML) methods can be used to improve the effectiveness of public schemes and inform policy decisions. Focusing on a massive tax rebate scheme introduced in Italy in 2014, it shows that the effectiveness of the program would have significantly increased if the beneficiaries had been selected according to a transparent and easily interpretable ML algorithm. Then, some issues in estimating and using ML for the actual implementation of public policies, such as transparency and accountability, are critically discussed. (C) 2018 Elsevier B.V. All rights reserved.