A Note on Endogenous Control Variables in Evaluation Studies

Michael Lechner

University of St. Gallen Department of Economics working paper series 2005 from Department of Economics, University of St. Gallen

Abstract: The paper addresses the issue of potentially endogenous control variables in evaluation studies based on the assumption that selection bias can be avoided by conditioning on observed variables. It shows that the standard formulation of the conditional independence (CIA) or selection on observables assumption obscures the endogeneity problem. The paper clarifies the issue by suggesting a CIA based on exogenous (potential) outcomes as well as explicit exogeneity conditions. The refined CIA allows to asses the endogeneity bias as well as the plausibility of the CIA, because it allows a separate discussion of (i) the problems of missing variables that are necessary to avoid selection bias, and (ii) the problem that some of the control variables may be influenced by the treatment.

JEL-codes: C21 C31 (search for similar items in EconPapers)
Pages: 8 pages
Date: 2005-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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