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Student Sorting and Bias in Value-Added Estimation: Selection on Observables and Unobservables

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  • Jesse Rothstein

    (Goldman School of Public Policy, University of California, Berkeley)

Abstract

Nonrandom assignment of students to teachers can bias value-added estimates of teachers' causal effects. Rothstein (2008, 2010) shows that typical value-added models indicate large counterfactual effects of fifth-grade teachers on students' fourth-grade learning, indicating that classroom assignments are far from random. This article quantifies the resulting biases in estimates of fifth-grade teachers' causal effects from several value-added models, under varying assumptions about the assignment process. If assignments are assumed to depend only on observables, the most commonly used specifications are subject to important bias, but other feasible specifications are nearly free of bias. I also consider the case in which assignments depend on unobserved variables. I use the across-classroom variance of observables to calibrate several models of the sorting process. Results indicate that even the best feasible value-added models may be substantially biased, with the magnitude of the bias depending on the amount of information available for use in classroom assignments. © 2009 American Education Finance Association

Suggested Citation

  • Jesse Rothstein, 2009. "Student Sorting and Bias in Value-Added Estimation: Selection on Observables and Unobservables," Education Finance and Policy, MIT Press, vol. 4(4), pages 537-571, October.
  • Handle: RePEc:tpr:edfpol:v:4:y:2009:i:4:p:537-571
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    References listed on IDEAS

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    1. Steven G. Rivkin & Eric A. Hanushek & John F. Kain, 2005. "Teachers, Schools, and Academic Achievement," Econometrica, Econometric Society, vol. 73(2), pages 417-458, March.
    2. Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, Oxford University Press, vol. 125(1), pages 175-214.
    3. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
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    More about this item

    Keywords

    value-added estimation; student sorting; bias; classroom assignments;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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