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Randomization as an Instrumental Variable: Notes

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  • Heckman, James J

Abstract

This paper discusses how randomized social experiments operate as an instrumental variable. For two types of randomization schemes, the fundamental experimental estimation equations are derived from the principle that experiments equate bias in control and experimental samples. Using conventional econometric representations, I derive the orthogonality conditions for the fundamental estimation equations. Randomization is a multiple instrumental variable in the sense that one randomization defines the parameter of interest expressed as a function of multiple endogenous variables in the conventional usage of that term. It orthogonalizes the treatment variable simultaneously with respect to the other regressors in the model and the disturbance term for the conditional population. However, conventional 'structural' parameters are not in general identified by the two types of randomization schemes widely used in practice. Copyright 1996 by MIT Press.

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  • Heckman, James J, 1996. "Randomization as an Instrumental Variable: Notes," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 336-341, May.
  • Handle: RePEc:tpr:restat:v:78:y:1996:i:2:p:336-41
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    2. Kluve, Jochen & Lehmann, Hartmut & Schmidt, Christoph M., 1999. "Active Labor Market Policies in Poland: Human Capital Enhancement, Stigmatization, or Benefit Churning?," Journal of Comparative Economics, Elsevier, vol. 27(1), pages 61-89, March.
    3. Dan A. Black & Joonhwi Joo & Robert LaLonde & Jeffrey Andrew Smith & Evan J. Taylor, 2017. "Simple Tests for Selection: Learning More from Instrumental Variables," CESifo Working Paper Series 6392, CESifo Group Munich.
    4. Dionissi Aliprantis, 2011. "Assessing the evidence on neighborhood effects from moving to opportunity," Working Paper 1101, Federal Reserve Bank of Cleveland.
    5. Schmidt, Christoph M. & Baltussen, Rob & Sauerborn, Rainer, 2000. "The Evaluation of Community-Based Interventions: Group Randomization, Limits and Alternatives," IZA Discussion Papers 206, Institute for the Study of Labor (IZA).
    6. Dionissi Aliprantis, 2013. "Covariates and causal effects: the problem of context," Working Paper 1310, Federal Reserve Bank of Cleveland.
    7. James J. Heckman & Jeffrey A. Smith, 1998. "Evaluating the Welfare State," NBER Working Papers 6542, National Bureau of Economic Research, Inc.
    8. Frondel, Manuel & Schmidt, Christoph M., 2005. "Evaluating environmental programs: The perspective of modern evaluation research," Ecological Economics, Elsevier, vol. 55(4), pages 515-526, December.
    9. Basu, Anirban, 2015. "Welfare implications of learning through solicitation versus diversification in health care," Journal of Health Economics, Elsevier, vol. 42(C), pages 165-173.
    10. Coady, David & Xinyi Dai & Limin Wang, 2001. "Community programs and women's participation : the Chinese experience," Policy Research Working Paper Series 2622, The World Bank.
    11. Ravallion, Martin & Wodon, Quentin, 1998. "Evaluating a targeted social program when placement is decentralized," Policy Research Working Paper Series 1945, The World Bank.
    12. Fertig, Michael, 2002. "Evaluating Immigration Policy Potentials and Limitations," IZA Discussion Papers 437, Institute for the Study of Labor (IZA).
    13. Black, Dan A. & Joo, Joonhwi & LaLonde, Robert J. & Smith, Jeffrey A. & Taylor, Evan J., 2015. "Simple Tests for Selection Bias: Learning More from Instrumental Variables," IZA Discussion Papers 9346, Institute for the Study of Labor (IZA).
    14. James J. Heckman, 2010. "Building Bridges between Structural and Program Evaluation Approaches to Evaluating Policy," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 356-398, June.
    15. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097 Elsevier.
    16. Jérémie Gignoux, 2006. "Évaluations ex ante et ex post d'un programme d'allocations scolaires conditionnées au Mexique," Économie et Prévision, Programme National Persée, vol. 174(3), pages 59-85.
    17. Kluve, Jochen & Fertig, Michael & Jacobi, Lena & Nima, Leonhard & Schaffner, Sandra & Schmidt, Christoph M. & Card, David & Góra, Marek & Jensen, Peter & Leetmaa, Reelika & Patacchini, Eleonora & van , 2005. "Study on the effectiveness of ALMPs: Research project for the European Commission, DG Employment, Social Affairs and Equal Opportunities. Final report," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 69929, March.
    18. Djebbari, Habiba & Smith, Jeffrey, 2008. "Heterogeneous impacts in PROGRESA," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 64-80, July.
    19. Ping Yu & Peter C.B. Phillips, 2014. "Threshold Regression with Endogeneity," Cowles Foundation Discussion Papers 1966, Cowles Foundation for Research in Economics, Yale University.
    20. Matthew Gentzkow & Jesse M. Shapiro, 2006. "Does Television Rot Your Brain? New Evidence from the Coleman Study," NBER Working Papers 12021, National Bureau of Economic Research, Inc.
    21. Malani, Anup, 2008. "Patient enrollment in medical trials: Selection bias in a randomized experiment," Journal of Econometrics, Elsevier, vol. 144(2), pages 341-351, June.
    22. Carolyn Heinrich & Jeffrey Wenger, 2002. "The Economic Contributions of James J. Heckman and Daniel L. McFadden," Review of Political Economy, Taylor & Francis Journals, vol. 14(1), pages 69-89.
    23. Vannieuwenhuyze, Jorre T.A. & Lynn, Peter, 2014. "Measurement effects between CAPI and Web questionnaires in the UK Household Longitudinal Study," Understanding Society Working Paper Series 2014-01, Understanding Society at the Institute for Social and Economic Research.
    24. Duo Qin, 2015. "Letís Take the Bias Out of Econometrics," Working Papers 192, Department of Economics, SOAS, University of London, UK.
    25. Aliou DIAGNE, 2006. "Diffusion And Adoption Of Nerica Rice Varieties In Côte D'Ivoire," The Developing Economies, Institute of Developing Economies, vol. 44(2), pages 208-231.

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