What Can We Learn From A Doubly Randomized Preference Trial?—An Instrumental Variables Perspective

The doubly randomized preference trial (DRPT) is a randomized experimental design with three arms: a treatment arm, a control arm, and a preference arm. The design has useful properties that have gone unnoticed in the applied and methodological literatures. This paper shows how to interpret the DRPT design using an instrumental variables (IV) framework. The IV framework reveals that the DRPT separately identifies three different treatment effect parameters: the Average Treatment Effect (ATE), the Average Treatment Effect on the Treated (ATT), and the Average Treatment Effect on the Untreated (ATU). The ATE, ATT, and ATU parameters are important for program evaluation research because in realistic settings many social programs are optional rather than mandatory and some people who are eligible for a program choose not to participate. Most of the paper is concerned with the interpretation of the research design. To make the ideas concrete, the final section provides an empirical example using data from an existing DRPT study.