IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Latent Variables and Propensity Score Matching

  • Maciej Jakubowski

    ()

    (Faculty of Economic Sciences, University of Warsaw)

This paper examines how including latent variables can benefit propensity score matching. A researcher can estimate, based on theoretical presumptions, the latent variable from the observed manifest variables and can use this estimate in propensity score matching. This paper demonstrates the benefits of such an approach and compares it with a method more common in econometrics, where the manifest variables are directly used in matching. We intuit that estimating the propensity score on the manifest variables introduces a measurement error that can be limited when estimating the propensity score on the estimated latent variable. We use Monte Carlo simulations to test how various matching methods behave under distinct circumstances found in practice. Also, we apply this approach to real data. Using the estimated latent variable in the propensity score matching increases the efficiency of treatment effect estimators. The benefits are larger for small samples, for non-linear processes, and for a large number of the manifest variables available, especially if they are highly correlated with the latent variable.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP29.pdf
File Function: First version, 2010
Download Restriction: no

Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2010-06.

as
in new window

Length: 29 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:war:wpaper:2010-06
Contact details of provider: Postal: ul. Dluga 44/50, 00-241 Warszawa
Phone: (+48 22) 55 49 144
Fax: (+48 22) 831 28 46
Web page: http://www.wne.uw.edu.pl/
Email:


More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:war:wpaper:2010-06. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marcin Bąba)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.