Using Matching, Instrumental Variables and Control Functions to Estimate Economic Choice Models
49 Pages Posted: 9 May 2003
Date Written: April 2003
This paper investigates four topics. (1) It examines the different roles played by the propensity score (probability of selection) in matching, instrumental variable and control functions methods. (2) It contrasts the roles of exclusion restrictions in matching and selection models. (3) It characterizes the sensitivity of matching to the choice of conditioning variables and demonstrates the greater robustness of control function methods to misspecification of the conditioning variables. (4) It demonstrates the problem of choosing the conditioning variables in matching and the failure of conventional model selection criteria when candidate conditioning variables are not exogenous.
Keywords: Matching, Control Functions, Instrumental Variables, Discrete Choice, Identification
JEL Classification: C31
Suggested Citation: Suggested Citation