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Using Lagged Outcomes to Evaluate Bias in Value-Added Models


  • Raj Chetty
  • John N. Friedman
  • Jonah Rockoff


Value-added (VA) models measure agents' productivity based on the outcomes they produce. The utility of VA models for performance evaluation depends on the extent to which VA estimates are biased by selection. One common method of evaluating bias in VA is to test for balance in lagged values of the outcome. We show that such balance tests do not yield robust information about bias in value-added models using Monte Carlo simulations. Even unbiased VA estimates can be correlated with lagged outcomes. More generally, tests using lagged outcomes are uninformative about the degree of bias in misspecified VA models. The source of these results is that VA is itself estimated using historical data, leading to non-transparent correlations between VA and lagged outcomes.

Suggested Citation

  • Raj Chetty & John N. Friedman & Jonah Rockoff, 2016. "Using Lagged Outcomes to Evaluate Bias in Value-Added Models," American Economic Review, American Economic Association, vol. 106(5), pages 393-399, May.
  • Handle: RePEc:aea:aecrev:v:106:y:2016:i:5:p:393-99 Note: DOI: 10.1257/aer.p20161081

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    References listed on IDEAS

    1. Joshua D. Angrist & Peter D. Hull & Parag A. Pathak & Christopher R. Walters, 2017. "Leveraging Lotteries for School Value-Added: Testing and Estimation," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 871-919.
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    Cited by:

    1. Hanushek, Eric A. & Rivkin, Steven G. & Schiman, Jeffrey C., 2016. "Dynamic effects of teacher turnover on the quality of instruction," Economics of Education Review, Elsevier, vol. 55(C), pages 132-148.
    2. Cook, Jason B. & Mansfield, Richard K., 2016. "Task-specific experience and task-specific talent: Decomposing the productivity of high school teachers," Journal of Public Economics, Elsevier, vol. 140(C), pages 51-72.
    3. repec:aea:aecrev:v:107:y:2017:i:6:p:1685-1717 is not listed on IDEAS

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity


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