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Smile: A Simple Diagnostic for Selection on Observables

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  • Slichter, David

Abstract

This paper develops a simple diagnostic for the selection on observables assumption in the case of a binary treatment variable. I show that, under common assumptions, when selection on observables does not hold, designs based on selection on observables will estimate treatment effects approaching infinity or negative infinity among observations with propensity scores close to 0 or 1. Researchers can check for violations of selection on observables either informally by looking for a "smile" shape in a binned scatterplot, or with a simple formal test. When selection on observables fails, the researcher can detect the sign of the resulting bias.

Suggested Citation

  • Slichter, David, 2020. "Smile: A Simple Diagnostic for Selection on Observables," MPRA Paper 99921, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99921
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other

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