Evaluating Programmes: Experiments, Non-Experiments and Propensity Scores

Evaluations of programmes ?for example, labour market interventions such as employment schemes and training courses- usually involve comparison of the performance of a treatment group (recipients of the programme) with a control group (non-recipients) as regards some response (gaining employment for example). But the idea of randomisation of individuals to groups is rarely possible in the social sciences and there may be substantial differences between groups in the distribution of individual characteristics than can affect response. Past practice in economics has been to try to use multiple regression models to adjust away the differences in observed characteristics, while also testing for sample selection bias. The Propensity Score approach, which is widely applied in epidemiology and related fields, focuses on the idea that ?matching? individuals in the groups should be compared. The appropriate matching measure is usually taken to be the prior probability of programme participation. This paper describes the key ideas of the Propensity Score method, compares it with the common approach in economics, reviews the arguments in the literature and illustrates application by reanalysis of some Irish data on training courses.