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The bmte command: Methods for the estimation of treatment effects when exclusion restrictions are unavailable

Author

Listed:
  • Ian McCarthy

    (Emory University)

  • Daniel Millimet

    (Southern Methodist University)

  • Rusty Tchernis

    (Georgia State University)

Abstract

We present a new Stata command, bmte (bias-minimizing treatment effects), that implements two new estimators proposed in Millimet and Tchernis (2013, Journal of Applied Econometrics 28: 982–1017) and designed to estimate the effect of treatment when selection on unobserved variables exists and appropriate exclusion restrictions are unavailable. In addition, the bmte command estimates treatment effects from several alternative estimators that also do not rely on exclusion restrictions for identification of the causal effects of the treatment, including the following: 1) Heckman’s two-step estimator (1976, Annals of Economic and Social Measurement 5: 475–492; 1979, Econometrica 47: 153–161); 2) a control function approach outlined in Heckman, LaLonde, and Smith (1999, Handbook of Labor Economics 3: 1865–2097) and Navarro (2008, The New Palgrave Dictionary of Economics [Palgrave Macmillan]); and 3) a more recent estimator proposed by Klein and Vella (2009, Journal of Applied Econometrics 24: 735–762) that exploits heteroskedasticity for identification. By implementing two new estimators alongside preexisting estimators, the bmte command provides a picture of the average causal effects of the treatment across a variety of assumptions. We present an example application of the command following Millimet and Tchernis (2013, Journal of Applied Econometrics 28: 982–1017). Copyright 2014 by StataCorp LP.

Suggested Citation

  • Ian McCarthy & Daniel Millimet & Rusty Tchernis, 2014. "The bmte command: Methods for the estimation of treatment effects when exclusion restrictions are unavailable," Stata Journal, StataCorp LP, vol. 14(3), pages 670-683, September.
    • Handle: RePEc:tsj:stataj:v:14:y:2014:i:3:p:670-683
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    1. Banerjee, Soumendra Nath & Roy, Jayjit & Yasar, Mahmut, 2021. "Exporting and pollution abatement expenditure: Evidence from firm-level data," Journal of Environmental Economics and Management, Elsevier, vol. 105(C).
    2. Susan Chen & Le Wang, 2021. "SNAP participation, diet quality, and obesity: robust evidence with estimation techniques without external instrumental variables," Empirical Economics, Springer, vol. 61(3), pages 1641-1667, September.
    3. Yuri M. Zhukov, 2014. "Theory of Indiscriminate Violence," Working Paper 365551, Harvard University OpenScholar.
    4. Tobias Brändle & Lukas Fervers, 2021. "Give it Another Try: What are the Effects of a Job Creation Scheme Especially Designed for Hard-to-Place Workers?," Journal of Labor Research, Springer, vol. 42(3), pages 382-417, December.
    5. Roychowdhury, Punarjit, 2021. "Too unwell to trust? The effect of mental health on social trust in Europe," Economics & Human Biology, Elsevier, vol. 42(C).
    6. Ian K. McDonough & Constant I. Tra, 2017. "The impact of computer-based tutorials on high school math proficiency," Empirical Economics, Springer, vol. 52(3), pages 1041-1063, May.
    7. Qian Sun, 2023. "SOE wage premium in China: new evidence," Empirical Economics, Springer, vol. 64(3), pages 1121-1147, March.
    8. Per G. Fredriksson & Jim R. Wollscheid, 2018. "Legal origins and environmental policies: evidence from OECD and developing countries," Letters in Spatial and Resource Sciences, Springer, vol. 11(3), pages 369-375, October.
    9. Ferraro, Paul J. & Miranda, Juan José, 2014. "The performance of non-experimental designs in the evaluation of environmental programs: A design-replication study using a large-scale randomized experiment as a benchmark," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 344-365.
    10. Hogan, Chellie A. & Walters, Lurleen M. & Williams, Brian R., 2018. "Evaluating the Effects of Legalization on Farmworker Wages in the Crop Sector," 2018 Annual Meeting, August 5-7, Washington, D.C. 274167, Agricultural and Applied Economics Association.

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