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On the Specification of Propensity Scores: with an Application to the WTO-Environment Debate

Author

Listed:
  • Daniel Millimet

    () (Southern Methodist University)

  • Rusty Tchernis

    () (Indiana University Bloomington)

Abstract

The use of propensity score methods for program evaluation with non-experimental data typically requires the propensity score be estimated, often with a model whose specification is unknown. While theoretical results suggest that estimators utilizing more flexible propensity score specifications perform better, this has not filtered into applied research. Here, we provide Monte Carlo evidence indicating the benefits of over-specifying the propensity score when using weighting estimators, as well as using normalized weights. We illustrate these results with an application assessing the environmental effects of GATT/WTO membership. We find that membership has a mixed impact, and that under-fitting the propensity score yields misleading inference in several cases.

Suggested Citation

  • Daniel Millimet & Rusty Tchernis, 2006. "On the Specification of Propensity Scores: with an Application to the WTO-Environment Debate," Caepr Working Papers 2006-013, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  • Handle: RePEc:inu:caeprp:2006013
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Treatment Effects; Propensity score; Specification; WTO; Environment;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • F18 - International Economics - - Trade - - - Trade and Environment

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