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Observational Agency and Supply-Side Econometrics


  • Tomas Philipson


A central problem in applied empirical work is to separate out the patterns in the data that are due to poor production of the data, such as e.g. non-response and measurement errors, from the patterns attributable to the economic phenomena studied. This paper interprets this inference problem as being an agency problem in the market for observations and suggests ways in which using incentives may be useful to overcome it. The paper discusses how wage discrimination may be used for identification of economic parameters of interest taking into account the responses in survey supply by sample members to that discrimination. Random wage discrimination alters the supply behavior of sample members across the same types of populations in terms of outcomes and thereby allows for separating out poor supply from the population parameters of economic interest. Empirical evidence for a survey of US physicians suggests that survey supply even for this wealthy group is affected by the types of wage discrimination schemes discussed in a manner that makes the schemes useful for identification purposes. Using such schemes to correct mean estimates of physician earnings increases those earnings by about one third.

Suggested Citation

  • Tomas Philipson, 1997. "Observational Agency and Supply-Side Econometrics," NBER Technical Working Papers 0210, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberte:0210 Note: HC

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    References listed on IDEAS

    1. Manski, C.F., 1992. "Identification Problems in the Social Sciences," Working papers 9217, Wisconsin Madison - Social Systems.
    2. Butler, J S, et al, 1987. "Measurement Error in Self-reported Health Variables," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 644-650, November.
    3. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    4. Lazear, Edward P, 1986. "Salaries and Piece Rates," The Journal of Business, University of Chicago Press, vol. 59(3), pages 405-431, July.
    5. Burstein, Philip L. & Cromwell, Jerry, 1985. "Relative incomes and rates of return for U.S. physicians," Journal of Health Economics, Elsevier, vol. 4(1), pages 63-78, March.
    6. Tomas Philipson, 1997. "Data Markets and the Production of Surveys," Review of Economic Studies, Oxford University Press, vol. 64(1), pages 47-72.
    7. Jeff Dominitz & Charles F. Manski, 1996. "Eliciting Student Expectations of the Returns to Schooling," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 1-26.
    8. Singh, S K & Maddala, G S, 1976. "A Function for Size Distribution of Incomes," Econometrica, Econometric Society, vol. 44(5), pages 963-970, September.
    9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    10. Manski, C.F., 1989. "The Use Of Intentions Data To Predict Behaviour : A Best- Case Analysis," Working papers 8905, Wisconsin Madison - Social Systems.
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