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Observational Agency and Supply-Side Econometrics

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  • Tomas Philipson

Abstract

A central problem in applied empirical work is to separate out the patterns in the data that are due to poor production of the data, such as e.g. non-response and measurement errors, from the patterns attributable to the economic phenomena studied. This paper interprets this inference problem as being an agency problem in the market for observations and suggests ways in which using incentives may be useful to overcome it. The paper discusses how wage discrimination may be used for identification of economic parameters of interest taking into account the responses in survey supply by sample members to that discrimination. Random wage discrimination alters the supply behavior of sample members across the same types of populations in terms of outcomes and thereby allows for separating out poor supply from the population parameters of economic interest. Empirical evidence for a survey of US physicians suggests that survey supply even for this wealthy group is affected by the types of wage discrimination schemes discussed in a manner that makes the schemes useful for identification purposes. Using such schemes to correct mean estimates of physician earnings increases those earnings by about one third.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Technical Working Papers with number 0210.

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Date of creation: Feb 1997
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Publication status: published as Tomas Philipson "Missing Data and Incentive Contracting", Econometrica, Volume 69, issue 4, 2001 pp. 1099-1111
Handle: RePEc:nbr:nberte:0210

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  1. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-31, July.
  2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  3. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations of the Returns to Schooling," NBER Working Papers 4936, National Bureau of Economic Research, Inc.
  4. repec:att:wimass:9217 is not listed on IDEAS
  5. repec:att:wimass:8905 is not listed on IDEAS
  6. Butler, J S, et al, 1987. "Measurement Error in Self-reported Health Variables," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 644-50, November.
  7. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-70, September.
  8. Philipson, Tomas, 1997. "Data Markets and the Production of Surveys," Review of Economic Studies, Wiley Blackwell, vol. 64(1), pages 47-72, January.
  9. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  10. Burstein, Philip L. & Cromwell, Jerry, 1985. "Relative incomes and rates of return for U.S. physicians," Journal of Health Economics, Elsevier, vol. 4(1), pages 63-78, March.
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Cited by:
  1. Imbens, G.W. & Rubin, D. & Sacerdote, B., 1999. "Estimating the effect of unearned income on labor supply, earnings, savings and consumption: Evidence from a survey of lottery players," Discussion Paper 99.34, Tilburg University, Center for Economic Research.

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