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Marc F. Bellemare Posts

Published September 10, 2012

Never Too LATE, Part 3: Observational Data

Last week I wrote two posts about the local average treatment effect (LATE). Click here for part 1, and here for part 2, in which I respectively discuss the difference between the ATE and the LATE, and the difficulty of comparing results across studies if different studies rely on different instrumental variables (IV).

This brings me to the topic of this post. After I posted part 2 last week, a reader — an economist who has been out of school for some time — emailed me with the following:

I can’t recall learning about this while in grad school. Surely it was mentioned and it’s just receded into a dark corner of my memory? It seems like a pretty important concept to consider, although I guess it’s a bigger concern for experimental economics?

The emphasis is mine. An equally emphatic answer would be: “No, it’s actually a huge problem with nonexperimental data.”

Wages, Education, and the Vietnam War

To see this, consider the classic IV example — Angrist’s (1990) study of the impact of education on wages. Because wages and education are jointly determined — if anything, there is reverse causality because people choose to go to spend time in school based on the expectation of a higher wage — Angrist used a respondent’s Vietnam draft lottery number as an IV for the respondent’s education.

Continue readingNever Too LATE, Part 3: Observational Data
Published September 6, 2012

Never Too LATE, Part 2

I began this discussion on Tuesday with an example in order to define the concept of local average treatment effect (LATE).

In the words of Imbens and Wooldridge (2007), LATEs are “average effects for subpopulations that are induced by the instrument to change the value of the endogenous regressors.”

What prompted my wanting to write about LATE is a post on Tom Pepinsky’s blog, where Tom discusses the frequent lack of discussion of local average treatment effects (LATEs) in the political science literature:

Continue readingNever Too LATE, Part 2
Published September 5, 2012

Kaushik Basu Is the New Chief Economist of the World Bank

I had heard a very credible rumor about this a few weeks ago, but here is the official announcement on the World Bank’s website. If you don’t know who he is, here is the Wiki entry for Kaushik Basu, and here is his Cornell webpage.

I was lucky enough to take Kaushik’s graduate level development class in the early years of my Ph.D. As you might expect, the course was mostly about theory, and we used Kaushik’s Analytical Development Economics as our textbook. I also really liked his 2003 book on political economy.

Kaushik is one of the most interesting lecturers I have had a chance to learn from in the ten years I spent as a student at various universities doing my B.Sc., M.Sc., and Ph.D. degrees. He is also one of my favorite writers in economics because of his clear, congenial style.