Observational Agency and Supply-Side Econometrics

42 Pages Posted: 20 Jul 2000 Last revised: 31 Jul 2010

See all articles by Tomas Philipson

Tomas Philipson

University of Chicago; National Bureau of Economic Research (NBER)

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Date Written: February 1997

Abstract

A central problem in applied empirical work is to separate out the patterns in the data that are due to poor production of the data, such as e.g. non-response and measurement errors, from the patterns attributable to the economic phenomena studied. This paper interprets this inference problem as being an agency problem in the market for observations and suggests ways in which using incentives may be useful to overcome it. The paper discusses how wage discrimination may be used for identification of economic parameters of interest taking into account the responses in survey supply by sample members to that discrimination. Random wage discrimination alters the supply behavior of sample members across the same types of populations in terms of outcomes and thereby allows for separating out poor supply from the population parameters of economic interest. Empirical evidence for a survey of US physicians suggests that survey supply even for this wealthy group is affected by the types of wage discrimination schemes discussed in a manner that makes the schemes useful for identification purposes. Using such schemes to correct mean estimates of physician earnings increases those earnings by about one third.

Suggested Citation

Philipson, Tomas J., Observational Agency and Supply-Side Econometrics (February 1997). NBER Working Paper No. t0210. Available at SSRN: https://ssrn.com/abstract=226618

Tomas J. Philipson (Contact Author)

University of Chicago ( email )

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