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The Information Basis of Matching with Propensity Score

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  • Maasoumi, Esfandiar

    (SMU)

  • Eren, Ozkan

    (SMU)

Abstract

This paper examines the foundations for comparing individuals and treatment subjects in experimental and other program evaluation contexts. We raise the question of multiattribute "characterization" of individuals both theoretically and statistically. The paper examines the information basis of characterizing individuals and offers alternatives motivated by welfare and decision theories. The proposed method helps place propensity scores and other "matching" proposals in context and reveals their advantages and disadvantages. We do not find the implied theoretical assumptions underlying propensity scores to be attractive or robust. Our proposal does not "solve" the matching problem, but provides bounds on inferences and makes clear the arbitrariness of specific solutions.

Suggested Citation

  • Maasoumi, Esfandiar & Eren, Ozkan, 2006. "The Information Basis of Matching with Propensity Score," Departmental Working Papers 0606, Southern Methodist University, Department of Economics.
    • Handle: RePEc:smu:ecowpa:0606
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    References listed on IDEAS

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    1. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-620, September.
    2. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    3. Oliver Linton & Esfandiar Maasoumi & Yoon-Jae Whang, 2005. "Consistent Testing for Stochastic Dominance under General Sampling Schemes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(3), pages 735-765.
    4. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    5. Dehejia, Rajeev H., 2005. "Program evaluation as a decision problem," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 141-173.
    6. James Heckman & Salvador Navarro-Lozano, 2004. "Using Matching, Instrumental Variables, and Control Functions to Estimate Economic Choice Models," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 30-57, February.
    7. C. W. Granger & E. Maasoumi & J. Racine, 2004. "A Dependence Metric for Possibly Nonlinear Processes," Journal of Time Series Analysis, Wiley Blackwell, vol. 25(5), pages 649-669, September.
    8. Maasoumi, Esfandiar & Nickelsburg, Gerald, 1988. "Multivariate Measures of Well-Being and an Analysis of Inequality in the Michigan Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(3), pages 326-334, July.
    9. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    10. Sen, Amartya K, 1977. "On Weights and Measures: Informational Constraints in Social Welfare Analysis," Econometrica, Econometric Society, vol. 45(7), pages 1539-1572, October.
    11. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    12. Maasoumi, Esfandiar, 1986. "The Measurement and Decomposition of Multi-dimensional Inequality," Econometrica, Econometric Society, vol. 54(4), pages 991-997, July.
    13. Serge-Christophe Kolm, 1977. "Multidimensional Egalitarianisms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(1), pages 1-13.
    14. Ram, Rati, 1982. "Composite indices of physical quality of life, basic needs fulfilment, and income : A principal component representation," Journal of Development Economics, Elsevier, vol. 11(2), pages 227-247, October.
    15. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
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    Cited by:

    1. Ginindza, Mzwandile & Maasoumi, Esfandiar, 2013. "Evaluating inflation targeting based on the distribution of inflation and inflation volatility," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 497-518.

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    More about this item

    Keywords

    treatment effect; information theory; multivariate scaling; propensity scores; utility functions; fundamentalism; Kullback-Leibler; entropy; aggregation.;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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