“You can’t fix by analysis what you bungled by design”

This is a quote from Light, Singer, and Willet (1990) and is mentioned on a recent commentary by Stephen B. Soumerai  and Ross Koppel in Health Services Research. The commentary focuses on the use of instrumental variables when conducting health care effectiveness reserach.  They define instrumental variables concisely as: An instrumental variable (IV) is a variable, generally found in…

Local Instrumental Variables

Traditional instrumental variables (IV) econometric methodologies often fail to take into account response heterogeneity. Response heterogeneity based on characteristics not observed by the researcher can create a heterogeneity in the self-selection process. For instance, one group of people who elect to receive surgery may have knowledge of a family history where surgery is typically successful,…