Journal of Business and Economic Statistics· 2016Q1
Unobservable Selection and Coefficient Stability: Theory and Evidence
- 5,081citations
- Q1SCImago
- 2016year
Short summary
A new theoretical framework explicitly links coefficient stability to unobservable selection bias, providing a formal method to bound potential omitted variable bias.
AI-generated from the title and abstract; the full text is not read.
Key points
- Develops a formal theory linking coefficient stability to unobservable selection bias.
- Demonstrates that both coefficient and R-squared movements are necessary for bounding bias.
- Provides a formal bounding argument for assessing omitted variable bias.
- Includes validation exercises and discusses applications in economics.
AI-generated from the title and abstract; the full text is not read.
Abstract
A common approach to evaluating robustness to omitted variable bias is to observe coefficient movements after inclusion of controls. This is informative only if selection on observables is informative about selection on unobservables. Although this link is known in theory in existing literature, very few empirical articles approach this formally. I develop an extension of the theory that connects bias explicitly to coefficient stability. I show that it is necessary to take into account coefficient and R-squared movements. I develop a formal bounding argument. I show two validation exercises and discuss application to the economics literature. Supplementary materials for this article are available online.
The authors' abstract, as published at the source. Journal of Business and Economic Statistics, 2016 · DOI ↗
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Field: Demography
DemographySocial Sciences