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Evaluating Specification Tests in the Context of Value-Added Estimation

  • Guarino, Cassandra

    ()

    (Indiana University)

  • Reckase, Mark D.

    ()

    (Michigan State University)

  • Stacy, Brian

    ()

    (Michigan State University)

  • Wooldridge, Jeffrey M.

    ()

    (Michigan State University)

We study the properties of two specification tests that have been applied to a variety of estimators in the context of value-added measures (VAMs) of teacher and school quality: the Hausman test for choosing between random and fixed effects and a test for feedback (sometimes called a "falsification test"). We discuss theoretical properties of the tests to serve as background. An extensive simulation study provides important further insight to the VAM setting. Unfortunately, while both the Hausman and feedback tests have good power for detecting the kinds of nonrandom assignment that can invalidate VAM estimates, they also reject in situations where estimated VAMs perform very well. Consequently, the tests must be used with caution when student tracking is used to form classrooms.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7974.

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Length: 46 pages
Date of creation: Feb 2014
Date of revision:
Handle: RePEc:iza:izadps:dp7974
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  1. Petra E. Todd & Kenneth I. Wolpin, 2003. "On The Specification and Estimation of The Production Function for Cognitive Achievement," Economic Journal, Royal Economic Society, vol. 113(485), pages F3-F33, February.
  2. Cory Koedel & Julian Betts, 2009. "Does Student Sorting Invalidate Value-Added Models of Teacher Effectiveness? An Extended Analysis of the Rothstein Critique," Working Papers 0902, Department of Economics, University of Missouri.
  3. Jesse Rothstein, 2010. "Teacher Quality in Educational Production: Tracking, Decay, and Student Achievement," The Quarterly Journal of Economics, MIT Press, vol. 125(1), pages 175-214, February.
  4. Guarino, Cassandra & Reckase, Mark D. & Wooldridge, Jeffrey M., 2012. "Can Value-Added Measures of Teacher Performance Be Trusted?," IZA Discussion Papers 6602, Institute for the Study of Labor (IZA).
  5. Josh Kinsler, 2012. "Assessing Rothstein's critique of teacher value‚Äźadded models," Quantitative Economics, Econometric Society, vol. 3(2), pages 333-362, 07.
  6. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  7. Wooldridge, Jeffrey M., 1990. "A Unified Approach to Robust, Regression-Based Specification Tests," Econometric Theory, Cambridge University Press, vol. 6(01), pages 17-43, March.
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