Tolerating defiance? Local average treatment effects without monotonicity

Clément de Chaisemartin
Additional contact information
Clément de Chaisemartin: The University of Warwick

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We know that instrumental variable (IV) estimates a causal effect if the instrument satisfies a monotonicity condition. When this condition is not satisfied, we only know that IV estimates the difference between the effect of the treatment in two groups. This difference could be a very misleading measure of the treatment effect: it could be negative, even when the effect is positive in both groups. There are a large number of studies in which monotonicity is implausible. One might then question whether we should trust their estimates. I show that IV estimates a causal effect under a much weaker condition than monotonicity. I outline three criteria applied researchers can use to assess whether this condition is applicable in their studies. When this weaker condition is applicable, they can credibly interpret their estimates as causal effects. When it is not, they should interpret their results with caution.

Keywords: instrumental variable; two stage least squares; heterogeneous effects; monotonicity; deers; internal validity (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ecm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www2.warwick.ac.uk/fac/soc/economics/resear ... 014_chaisemartin.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:197

Access Statistics for this paper

More papers in CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE) Contact information at EDIRC.
Bibliographic data for series maintained by Jane Snape ().