Working Paper: NBER ID: w11259
Authors: James J. Heckman; Edward Vytlacil
Abstract: This paper uses the marginal treatment effect (MTE) to unify the nonparametric literature on treatment effects with the econometric literature on structural estimation using a nonparametric analog of a policy invariant parameter; to generate a variety of treatment effects from a common semiparametric functional form; to organize the literature on alternative estimators; and to explore what policy questions commonly used estimators in the treatment effect literature answer. A fundamental asymmetry intrinsic to the method of instrumental variables is noted. Recent advances in IV estimation allow for heterogeneity in responses but not in choices, and the method breaks down when both choice and response equations are heterogeneous in a general way.
Keywords: Marginal Treatment Effect; Policy Evaluation; Instrumental Variables; Structural Econometrics; Treatment Effects
JEL Codes: C1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MTE (O53) | mean response of individuals to treatment (C22) |
| MTE (O53) | willingness-to-pay measure for outcomes (J17) |
| instruments (C26) | estimated treatment parameters (C51) |
| heterogeneity (D29) | variation of MTE across individuals (C30) |
| traditional IV procedures (C26) | MTE same for all individuals (C30) |
| choice of instruments (C36) | treatment parameters (C22) |