On the Plausibility of the Latent Ignorability Assumption

Martin Huber

Econometrics, 2021, vol. 9, issue 4, 1-6

Abstract: The estimation of the causal effect of an endogenous treatment based on an instrumental variable (IV) is often complicated by the non-observability of the outcome of interest due to attrition, sample selection, or survey non-response. To tackle the latter problem, the latent ignorability (LI) assumption imposes that attrition/sample selection is independent of the outcome conditional on the treatment compliance type (i.e., how the treatment behaves as a function of the instrument), the instrument, and possibly further observed covariates. As a word of caution, this note formally discusses the strong behavioral implications of LI in rather standard IV models. We also provide an empirical illustration based on the Job Corps experimental study, in which the sensitivity of the estimated program effect to LI and alternative assumptions about outcome attrition is investigated.

Keywords: instrument; non-response; attrition; sample selection; latent ignorability (search for similar items in EconPapers)
JEL-codes: B23 C C00 C01 C1 C2 C3 C4 C5 C8 (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: On the plausibility of the latent ignorability assumption (2020)
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