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Treatment Effect Identification under Selection on Potential Outcomes

Author

Listed:
  • Takahiro

    (Department of Economics, Keio University)

  • Kazuhiko Shinoda

    (Department of Economics, Nagoya University)

  • Taisuke Otsu

    (Department of Economics, London School of Economics)

Abstract

This paper develops an auxiliary-measurement approach to identifying average treatment effects in generalized Roy environments where treatment choice may depend directly on potential outcomes. Identification is formulated as a primal–dual inverse problem. A latent selection-odds representer anchors a causally correct element in an observed calibration set, which may be nonunique. An adjoint outcome representer certifies that the target mean is invariant over that set, so identification does not require point identification of the calibrating function itself. This separation yields a trichotomy between non-invariance, irregular identification, and regular orthogonal-moment representation, according to the position of the outcome signal in the adjoint range. The same geometry delivers an orthogonal estimating equation and an exact product-bias identity, supporting sieve GMM and cross-fitted estimation. Simulations illustrate regular, weak, and failed range regimes. An application to retirement and cognition in the Health and Retirement Study shows that specifications restricted to observed adjustment and those allowing selection on gains yield materially different estimates, illustrating the framework’s empirical content under maintained calibration and adjoint-representation assumptions.

Suggested Citation

  • Takahiro & Kazuhiko Shinoda & Taisuke Otsu, 2026. "Treatment Effect Identification under Selection on Potential Outcomes," Keio-IES Discussion Paper Series DP2026-012, Institute for Economics Studies, Keio University.
  • Handle: RePEc:keo:dpaper:dp2026-012
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    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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