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Propensity Score Weighting with Mismeasured Covariates: An Application to Two Financial Literacy Interventions

Author

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  • Hao Dong

    (Southern Methodist University)

  • Daniel L. Millimet

    (Southern Methodist University)

Abstract

Estimation of the causal effect of a binary treatment on outcomes often requires conditioning on covariates to address selection on observed variables. This is not straightforward when one or more of the covariates are measured with error. Here, we present a new semi-parametric estimator that addresses this issue. In particular, we focus on inverse propensity score weighting estimators when the propensity score is of an unknown functional form and some covariates are subject to classical measurement error. Our proposed solution involves deconvolution kernel estimators of the propensity score and the regression function weighted by a deconvolution kernel density estimator. Simulations and replication of a study examining the impact of two financial literacy interventions on the business practices of entrepreneurs show our estimator to be valuable to empirical researchers.

Suggested Citation

  • Hao Dong & Daniel L. Millimet, 2020. "Propensity Score Weighting with Mismeasured Covariates: An Application to Two Financial Literacy Interventions," Departmental Working Papers 2013, Southern Methodist University, Department of Economics.
    • Handle: RePEc:smu:ecowpa:2013
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    Cited by:

    1. Iwa Kuchciak & Justyna Wiktorowicz, 2021. "Empowering Financial Education by Banks—Social Media as a Modern Channel," JRFM, MDPI, vol. 14(3), pages 1-22, March.

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    More about this item

    Keywords

    Program evaluation; measurement error; propensity score; unconfoundedness; financial literacy.;
    All these keywords.

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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