Independence, Monotonicity, and Latent Index Models: An Equivalence Result

Posted: 17 Jul 2002

See all articles by Edward Vytlacil

Edward Vytlacil

Yale University - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

The selection model and instrumental variable, local average treatment effect (LATE) framework are widely interpreted as alternative, competing frameworks. This note shows that the assumption of an unobserved index crossing a threshold that defines the selection model is equivalent to the independence and monotonicity assumptions at the center of the LATE approach. The underlying assumptions of the two approaches are equivalent.

Keywords: selection model, latent index model, instrumental variables, social program evaluation, local average treatment effect

JEL Classification: C34, H43

Suggested Citation

Vytlacil, Edward J., Independence, Monotonicity, and Latent Index Models: An Equivalence Result. Econometrica, Vol. 70, pp. 331-341, 2002. Available at SSRN: https://ssrn.com/abstract=312233

Edward J. Vytlacil (Contact Author)

Yale University - Department of Economics ( email )

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New Haven, CT 06520-8281
United States

National Bureau of Economic Research (NBER)

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