Targeting for Long-Term Outcomes

Abstract

Decision makers often want to target interventions so as to maximize an outcome that is observed only in the long term. This typically requires delaying decisions until the outcome is observed or relying on simple short-term proxies for the long-term outcome. Here, we build on the statistical surrogacy and policy learning literatures to impute the missing long-term outcomes and then approximate the optimal targeting policy on the imputed outcomes via a doubly robust approach. We first show that conditions for the validity of average treatment effect estimation with imputed outcomes are also sufficient for valid policy evaluation and optimization; furthermore, these conditions can be somewhat relaxed for policy optimization. We apply our approach in two large-scale proactive churn management experiments at The Boston Globe by targeting optimal discounts to its digital subscribers with the aim of maximizing long-term revenue. Using the first experiment, we evaluate this approach empirically by comparing the policy learned using imputed outcomes with a policy learned on the ground-truth, long-term outcomes. The performance of these two policies is statistically indistinguishable, and we rule out large losses from relying on surrogates. Our approach also outperforms a policy learned on short-term proxies for the long-term outcome. In a second field experiment, we implement the optimal targeting policy with additional randomized exploration, which allows us to update the optimal policy for future subscribers. Over three years, our approach had a net-positive revenue impact in the range of $4–$5 million compared with the status quo. This paper was accepted by Eric Anderson, marketing. Funding: This work was supported by Boston Globe Media. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4881 .