Instrument Validity Tests With Causal Forests

Helmut Farbmacher, Raphael Guber and Sven Klaassen

Journal of Business & Economic Statistics, 2022, vol. 40, issue 2, 605-614

Abstract: Assumptions that are sufficient to identify local average treatment effects (LATEs) generate necessary conditions that allow instrument validity to be refuted. The degree to which instrument validity is violated, however, probably varies across subpopulations. In this article, we use causal forests to search and test for such local violations of the LATE assumptions in a data-driven way. Unlike previous instrument validity tests, our procedure is able to detect local violations. We evaluate the performance of our procedure in simulations and apply it in two different settings: parental preferences for mixed-sex composition of children and the Vietnam draft lottery.

Date: 2022
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Citations: View citations in EconPapers (7)

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DOI: 10.1080/07350015.2020.1847122

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