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Minimizing Bias in Selection on Observables Estimators When Unconfoundness Fails

Author

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  • Millimet, Daniel L.

    () (Southern Methodist University)

  • Tchernis, Rusty

    () (Georgia State University)

Abstract

We characterize the bias of propensity score based estimators of common average treatment effect parameters in the case of selection on unobservables. We then propose a new minimum biased estimator of the average treatment effect. We assess the finite sample performance of our estimator using simulated data, as well as a timely application examining the causal effect of the School Breakfast Program on childhood obesity. We find our new estimator to be quite advantageous in many situations, even when selection is only on observables.

Suggested Citation

  • Millimet, Daniel L. & Tchernis, Rusty, 2008. "Minimizing Bias in Selection on Observables Estimators When Unconfoundness Fails," IZA Discussion Papers 3632, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3632
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    References listed on IDEAS

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    1. Daniel L. Millimet & Rusty Tchernis & Muna Husain, 2010. "School Nutrition Programs and the Incidence of Childhood Obesity," Journal of Human Resources, University of Wisconsin Press, vol. 45(3).
    2. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    3. Jayanta Bhattacharya & Janet Currie & Steven J. Haider, 2006. "Breakfast of Champions?: The School Breakfast Program and the Nutrition of Children and Families," Journal of Human Resources, University of Wisconsin Press, vol. 41(3).
    4. Millimet, Daniel L. & Tchernis, Rusty, 2009. "On the Specification of Propensity Scores, With Applications to the Analysis of Trade Policies," Journal of Business & Economic Statistics, American Statistical Association, vol. 27(3), pages 397-415.
    5. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects, and Econometric Policy Evaluation," Econometrica, Econometric Society, vol. 73(3), pages 669-738, May.
    6. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
    7. Keisuke Hirano & Guido W. Imbens & Geert Ridder, 2003. "Efficient Estimation of Average Treatment Effects Using the Estimated Propensity Score," Econometrica, Econometric Society, vol. 71(4), pages 1161-1189, July.
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    Cited by:

    1. Sampaio, Breno Ramos & Sampaio, Gustavo Ramos & Sampaio, Yony, 2012. "On Estimating The Effects of Legalization: Do Agricultural Workers Really Benefit?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126858, International Association of Agricultural Economists.
    2. Owusu, Victor & Abdulai, Awudu & Abdul-Rahman, Seini, 2011. "Non-farm work and food security among farm households in Northern Ghana," Food Policy, Elsevier, vol. 36(2), pages 108-118, April.
    3. Gurun, Ayfer & Millimet, Daniel L., 2008. "Does Private Tutoring Payoff?," IZA Discussion Papers 3637, Institute for the Study of Labor (IZA).
    4. Zhang, Chunqin & Juan, Zhicai & Xiao, Guangnian, 2015. "Do contractual practices affect technical efficiency? Evidence from public transport operators in China," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 80(C), pages 39-55.

    More about this item

    Keywords

    selection on unobservables; unconfoundedness; treatment effects; propensity score; bias;

    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

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