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Randomization as an Instrumental Variable

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Author Info
James J. Heckman

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Abstract

This paper discusses how randomized social experiments operate as an instrumental variable. For two types of randomization schemes, the fundamental experimental estimation equations are derived from the principle that experiments equate bias in control and experimental samples. Using conventional econometric representations, we derive the orthogonality conditions for the fundamental estimation equations. Randomization is a multiple instrumental variable in the sense that one randomization defines the parameter of interest expressed as a function of multiple endogenous variables in the conventional usage of that term. It orthogonalizes the treatment variable simultaneously with respect to the other regressors in the model and the disturbance term for the conditional population. However, conventional `structural' parameters are not in general identified by the two types of randomization schemes widely used in practice.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number 0184.

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Date of creation: Sep 1995
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Handle: RePEc:nbr:nberte:0184

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Find related papers by JEL classification:
C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Estimation
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

References listed on IDEAS
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  1. Heckman, J. & Smith, J. & Taber, C., 1994. "Accounting for Dropouts in Evaluations of Social Experiments," University of Chicago - Economics Research Center 94-3, Chicago - Economics Research Center.
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  2. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267. [Downloadable!] (restricted)
  3. Angrist, J.D. & Imbens, G.W., 1991. "Sources of Identifying Information in Evaluation Models," Harvard Institute of Economic Research Working Papers 1568, Harvard - Institute of Economic Research.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kluve, Jochen & Lehmann, Hartmut & Schmidt, Christoph M., 1999. "Active Labor Market Policies in Poland: Human Capital Enhancement, Stigmatization or Benefit Churning," IZA Discussion Papers 30, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. David Card & Winston Lin & Philip Robins, 1997. "Would Financial Incentives for Leaving Welfare Lead Some People to Stay on Welfare Longer? An Experimental Evaluation of 'Entry Effects' in the Self-Sufficiency Project," Working Papers 759, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  3. Jeffrey Smith & Petra Todd, 2003. "Does Matching Overcome Lalonde's Critique of Nonexperimental Estimators?," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20035, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
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  4. repec:fth:prinin:380 is not listed on IDEAS
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