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Re: st: treatreg (specification of indepvars_t)


From   Partha Deb <partha.deb@hunter.cuny.edu>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: treatreg (specification of indepvars_t)
Date   Mon, 05 Mar 2007 10:45:24 -0500

Richard,

Both examples are correct, as how you think of -treatreg- is more a philosophical issue, rather than one of "correctness". If you think of the treatment and outcome equations as being structural, and you believe you have the correct structure, then a model such as (1), where the -treat- equation is not of a "reduced form" kind, is perfectly appropriate. But this leaves you open to attacks on whether the structure is correct on both treatment and outcome equations.

If you take the approach and specify the treatment equation as a reduced form, then you have the lower burden of defending the structure of the outcome equation, and are implicitly admitting you don't have much confidence in whatever structural form might underly the treatment process. It's safe to say this is currently the more popular approach.

Hope this helps.

Partha



Richard Lo wrote:

Dear Stata-listers,
Although I have read some materials on the treatment
effect model, I am still not sure whether I should specify a structural or a reduced-form equation for
the treatment(selection) equation. According to the
textbooks of Wooldridge (2002) and Greene (2003), it
seems that a reduced-form treatment equation should be
used. Though in Maddala (1983, p120-122), it is not
clear which form is specified for the probit equation.


{It seems that the example given in the on-line help [
the command in (1)]specifies the excluded variables
only, which would not produce a reduced-form results
for the treatment equation [as the command in (2)
does].
(1)treatreg ww wa cit, treat(wc=wmed wfed) twostep
(2)treatreg ww wa cit, treat(wc=wa cit wmed wfed)
twostep
As a result, I am puzzled at the correct way to
specify the variables (indepvars_t) for the treatment
equation. The results will be different depending on
whether only excluded variables or all the exogenous
variables are specified in the treatreg command.
[Unlike ivreg command which would produce the same
results when we specified either way. ]

Would be grateful that someone can give me some
guidance on this issue.
Thanks you for your kind help in advance.

Richard Lo



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Partha Deb
Department of Economics
Hunter College
ph:  (212) 772-5435
fax: (212) 772-5398
http://urban.hunter.cuny.edu/~deb/

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