A Note on the Common Support Problem in Applied Evaluation Studies

Univ. of St. Gallen Economics, Disc. Paper 2001-01

27 Pages Posted: 15 Feb 2001

See all articles by Michael Lechner

Michael Lechner

University of St. Gallen - Swiss Institute for Empirical Economic Research

Date Written: November 2000

Abstract

This paper advocates the use of a nonparametric bounds analysis to check the robustness of the results of applied evaluation studies to the problem of a lack of common support. The typical responses by researchers of either ignoring it, or obtaining estimates only for the subpopulation within the common support, can both be misleading: Ignoring the problem may result in biases because the comparison group may not be comparable. Deleting observations at best yields an estimator that is consistent for the common support. When treatment effects are heterogeneous inside and outside the common support this estimator is inconsistent. Furthermore, useful information is ignored, because the response of the treated to the treatment can be estimated even outside the common support. This information can be used to derive bounds with width depending on the configuration of the data. The application to an evaluation study of Swiss active labour market policies shows that the relevance of the bounds for changing the interpretation of the results depends very much on the particular data configuration.

Keywords: Bounds, matching, propensity score, treatment effects.

JEL Classification: C10, C50, J60, J68

Suggested Citation

Lechner, Michael, A Note on the Common Support Problem in Applied Evaluation Studies (November 2000). Univ. of St. Gallen Economics, Disc. Paper 2001-01. Available at SSRN: https://ssrn.com/abstract=259239 or http://dx.doi.org/10.2139/ssrn.259239

Michael Lechner (Contact Author)

University of St. Gallen - Swiss Institute for Empirical Economic Research ( email )

Varnbuelstrasse 14
St. Gallen, 9000
Switzerland
+41 71 224 2320 (Phone)

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