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LARF: Instrumental Variable Estimation of Causal Effects through Local Average Response Functions

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  • An, Weihua
  • Wang, Xuefu

Abstract

LARF is an R package that provides instrumental variable estimation of treatment effects when both the endogenous treatment and its instrument (i.e., the treatment inducement) are binary. The method (Abadie 2003) involves two steps. First, pseudo-weights are constructed from the probability of receiving the treatment inducement. By default LARF estimates the probability by a probit regression. It also provides semiparametric power series estimation of the probability and allows users to employ other external methods to estimate the probability. Second, the pseudo-weights are used to estimate the local average response function conditional on treatment and covariates. LARF provides both least squares and maximum likelihood estimates of the conditional treatment effects.

Suggested Citation

  • An, Weihua & Wang, Xuefu, 2016. "LARF: Instrumental Variable Estimation of Causal Effects through Local Average Response Functions," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 71(c01).
    • Handle: RePEc:jss:jstsof:v:071:c01
    DOI: http://hdl.handle.net/10.18637/jss.v071.c01
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    References listed on IDEAS

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    6. Bach, Ruben L. & Eckman, Stephanie, 2017. "Does participating in a panel survey change respondents' labor market behavior?," IAB-Discussion Paper 201715, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Rossmann, Tobias, 2019. "Does Experience Shape Subjective Expectations?," Rationality and Competition Discussion Paper Series 181, CRC TRR 190 Rationality and Competition.
    8. Weihua An & Ying Ding, 2018. "The Landscape of Causal Inference: Perspective From Citation Network Analysis," The American Statistician, Taylor & Francis Journals, vol. 72(3), pages 265-277, July.

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