Unobservable Selection and Coefficient Stability: Theory and Validation / Emily Oster.

Format:

Book

Author/Creator:

Oster, Emily.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w19054.

NBER working paper series no. w19054

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2013.

Summary:

A common heuristic for evaluating robustness of results to omitted variable bias is to look at coefficient movements after inclusion of controls. This heuristic is informative only if selection on observables is proportional to selection on unobservables. I formalize this link, drawing on theory in Altonji, Elder and Taber (2005) and show how, with this assumption, coefficient movements, along with movements in R-squared values, can be used to calculate omitted variable bias. I discuss empirical implementation and describe a formal bounding argument to replace the coefficient movement heuristic. I show two validation exercises suggesting that this bounding argument would perform well empirically. I discuss application of this procedure to a large set of publications in economics, and use evidence from randomized studies to draw guidelines as to appropriate bounding values.

Notes:

Print version record

May 2013.