Abadie’s Kappa and Weighting Estimators of the Local Average Treatment Effect

Tymon Słoczyński, S. Derya Uysal and Jeffrey M. Wooldridge

Journal of Business & Economic Statistics, 2025, vol. 43, issue 1, 164-177

Abstract: Recent research has demonstrated the importance of flexibly controlling for covariates in instrumental variables estimation. In this article we study the finite sample and asymptotic properties of various weighting estimators of the local average treatment effect (LATE), motivated by Abadie’s kappa theorem and offering the requisite flexibility relative to standard practice. We argue that two of the estimators under consideration, which are weight normalized, are generally preferable. Several other estimators, which are unnormalized, do not satisfy the properties of scale invariance with respect to the natural logarithm and translation invariance, thereby exhibiting sensitivity to the units of measurement when estimating the LATE in logs and the centering of the outcome variable more generally. We also demonstrate that, when noncompliance is one sided, certain weighting estimators have the advantage of being based on a denominator that is strictly greater than zero by construction. This is the case for only one of the two normalized estimators, and we recommend this estimator for wider use. We illustrate our findings with a simulation study and three empirical applications, which clearly document the sensitivity of unnormalized estimators to how the outcome variable is coded. We implement the proposed estimators in the Stata package kappalate.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/07350015.2024.2332763 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Abadie's Kappa and Weighting Estimators of the Local Average Treatment Effect (2023)
Working Paper: Abadie's Kappa and Weighting Estimators of the Local Average Treatment Effect (2022)
Working Paper: Abadie's Kappa and Weighting Estimators of the Local Average Treatment Effect (2022)
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:taf:jnlbes:v:43:y:2025:i:1:p:164-177

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/UBES20

DOI: 10.1080/07350015.2024.2332763

Access Statistics for this article

Journal of Business & Economic Statistics is currently edited by Eric Sampson, Rong Chen and Shakeeb Khan

More articles in Journal of Business & Economic Statistics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().