Selection Correction and Sensitivity Analysis for Ordered Treatment Effect on Count Response

TitleSelection Correction and Sensitivity Analysis for Ordered Treatment Effect on Count Response
Publication TypeJournal Article
Year of Publication2004
AuthorsLee, MJae
JournalJournal of Applied Econometrics
KeywordsHealth Conditions and Status, Methodology

In estimating the effect of an ordered treatment on a count response y with an observational data where tau is self selected (not randomized), observed variables x and unobserved variables epsilon can be unbalanced across the control group (tau = 0) and the treatment groups (tau = 1, . . . , J). While the imbalance in x causes overt bias which can be removed by controlling for x, the imbalance in epsilon causes covert (hidden or selection) bias which cannot be easily removed. This paper makes three contributions. First, a proper counter factual causal framework for ordered treatment effect on count response is set up. Second, with no plausible instrument available for tau, a selection correction approach is proposed for the hidden bias. Third, a nonparametric sensitivity analysis is proposed where the treatment effect is nonparametrically estimated under no hidden bias first, and then a sensitivity analysis is conducted to see how sensitive the nonparametric estimate is to the assumption of no hidden bias. The analytic framework is applied to data from the Health and Retirement Study: the treatment is ordered exercise levels in five categories and the response is doctor office visits per year. The selection correction approach yields very large effects, which are however ruled out by the nonparametric sensitivity analysis. This finding suggests a good deal of caution in using selection correction approaches.


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Endnote Keywords

Single Equation Models/Regression Analysis/Health Production/Spatial Models/Econometric and Statistical Methods

Endnote ID


Citation Key6982