On the Estimation of Treatment Effects with Endogenous Misreporting

51 Pages Posted: 12 Apr 2018

See all articles by Pierre Nguimkeu

Pierre Nguimkeu

Georgia State University

Augustine Denteh

Harvard University - Department of Health Care Policy; Georgia State University

Rusty Tchernis

Georgia State University - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

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Abstract

Participation in social programs is often misreported in survey data, complicating the estimation of the effects of those programs. In this paper, we propose a model to estimate treatment effects under endogenous participation and endogenous misreporting. We show that failure to account for endogenous misreporting can result in the estimate of the treatment effect having an opposite sign from the true effect. We present an expression for the asymptotic bias of both OLS and IV estimators and discuss the conditions under which sign reversal may occur. We provide a method for eliminating this bias when researchers have access to information related to both participation and misreporting. We establish the consistency and asymptotic normality of our estimator and assess its small sample performance through Monte Carlo simulations. An empirical example is given to illustrate the proposed method.

Keywords: endogeneity, misclassification, treatment effect, binary regressor, partial observability, bias

JEL Classification: C35, C51

Suggested Citation

Nguimkeu, Pierre and Denteh, Augustine and Tchernis, Rusty, On the Estimation of Treatment Effects with Endogenous Misreporting. IZA Discussion Paper No. 11426. Available at SSRN: https://ssrn.com/abstract=3158111

Pierre Nguimkeu (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Augustine Denteh

Harvard University - Department of Health Care Policy ( email )

25 Shattuck Street
Boston, MA 02115
United States

Georgia State University

Rusty Tchernis

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

HOME PAGE: http://www2.gsu.edu/~ecort

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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