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Treatment effect heterogeneity in theory and practice

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  • Joshua D. Angrist

Abstract

Instrumental Variables (IV) methods identify internally valid causal effects for individuals whose treatment status is manipulable by the instrument at hand. Inference for other populations requires homogeneity assumptions. This paper outlines a theoretical framework that nests causal homogeneity assumptions. These ideas are illustrated using sibling-sex composition to estimate the effect of childbearing on economic and marital outcomes. The application is motivated by American welfare reform. The empirical results generally support the notion of reduced labour supply and increased poverty as a consequence of childbearing but evidence on the impact of childbearing on marital stability and welfare use is more tenuous. Copyright 2004 Royal Economic Society.

Suggested Citation

  • Joshua D. Angrist, 2004. "Treatment effect heterogeneity in theory and practice," Economic Journal, Royal Economic Society, vol. 114(494), pages 52-83, March.
    • Handle: RePEc:ecj:econjl:v:114:y:2004:i:494:p:c52-c83
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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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