IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2406.09521.html
   My bibliography  Save this paper

Randomization Inference: Theory and Applications

Author

Listed:
  • David M. Ritzwoller
  • Joseph P. Romano
  • Azeem M. Shaikh

Abstract

We review approaches to statistical inference based on randomization. Permutation tests are treated as an important special case. Under a certain group invariance property, referred to as the ``randomization hypothesis,'' randomization tests achieve exact control of the Type I error rate in finite samples. Although this unequivocal precision is very appealing, the range of problems that satisfy the randomization hypothesis is somewhat limited. We show that randomization tests are often asymptotically, or approximately, valid and efficient in settings that deviate from the conditions required for finite-sample error control. When randomization tests fail to offer even asymptotic Type 1 error control, their asymptotic validity may be restored by constructing an asymptotically pivotal test statistic. Randomization tests can then provide exact error control for tests of highly structured hypotheses with good performance in a wider class of problems. We give a detailed overview of several prominent applications of randomization tests, including two-sample permutation tests, regression, and conformal inference.

Suggested Citation

  • David M. Ritzwoller & Joseph P. Romano & Azeem M. Shaikh, 2024. "Randomization Inference: Theory and Applications," Papers 2406.09521, arXiv.org.
  • Handle: RePEc:arx:papers:2406.09521
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2406.09521
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Biswas, Munmun & Ghosh, Anil K., 2014. "A nonparametric two-sample test applicable to high dimensional data," Journal of Multivariate Analysis, Elsevier, vol. 123(C), pages 160-171.
    2. Joseph P. Romano & Marius A. Tirlea, 2022. "Permutation testing for dependence in time series," Journal of Time Series Analysis, Wiley Blackwell, vol. 43(5), pages 781-807, September.
    3. Lihua Lei & Peter J Bickel, 2021. "An assumption-free exact test for fixed-design linear models with exchangeable errors [Rank tests of sub-hypotheses in the general linear regression]," Biometrika, Biometrika Trust, vol. 108(2), pages 397-412.
    4. Federico A. Bugni & Ivan A. Canay & Azeem M. Shaikh, 2018. "Inference Under Covariate-Adaptive Randomization," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(524), pages 1784-1796, October.
    5. Huang, Yuan & Li, Changcheng & Li, Runze & Yang, Songshan, 2022. "An overview of tests on high-dimensional means," Journal of Multivariate Analysis, Elsevier, vol. 188(C).
    6. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2008. "Bootstrap-Based Improvements for Inference with Clustered Errors," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 414-427, August.
    7. Susan Athey & Dean Eckles & Guido W. Imbens, 2018. "Exact p-Values for Network Interference," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(521), pages 230-240, January.
    8. Marinho Bertanha & Eunyi Chung, 2023. "Permutation Tests at Nonparametric Rates," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 118(544), pages 2833-2846, October.
    9. Young, Alwyn, 2024. "Asymptotically robust permutation-based randomization confidence intervals for parametric OLS regression," LSE Research Online Documents on Economics 120933, London School of Economics and Political Science, LSE Library.
    10. David M. Ritzwoller & Vasilis Syrgkanis, 2024. "Simultaneous Inference for Local Structural Parameters with Random Forests," Papers 2405.07860, arXiv.org, revised Sep 2024.
    11. Federico A. Bugni & Ivan A. Canay & Azeem M. Shaikh, 2019. "Inference under covariate‐adaptive randomization with multiple treatments," Quantitative Economics, Econometric Society, vol. 10(4), pages 1747-1785, November.
    12. Alberto Abadie & Susan Athey & Guido W. Imbens & Jeffrey M. Wooldridge, 2020. "Sampling‐Based versus Design‐Based Uncertainty in Regression Analysis," Econometrica, Econometric Society, vol. 88(1), pages 265-296, January.
    13. Kirill Borusyak & Peter Hull, 2023. "Nonrandom Exposure to Exogenous Shocks," Econometrica, Econometric Society, vol. 91(6), pages 2155-2185, November.
    14. Romano Joseph P. & Shaikh Azeem & Wolf Michael, 2011. "Consonance and the Closure Method in Multiple Testing," The International Journal of Biostatistics, De Gruyter, vol. 7(1), pages 1-25, February.
    15. Peter Ganong & Simon Jäger, 2018. "A Permutation Test for the Regression Kink Design," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(522), pages 494-504, April.
    16. Cai Yong & Canay Ivan A. & Kim Deborah & Shaikh Azeem M., 2023. "On the Implementation of Approximate Randomization Tests in Linear Models with a Small Number of Clusters," Journal of Econometric Methods, De Gruyter, vol. 12(1), pages 85-103, January.
    17. Barberis, Nicholas & Thaler, Richard, 2003. "A survey of behavioral finance," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 18, pages 1053-1128, Elsevier.
    18. Jing Lei & Max G’Sell & Alessandro Rinaldo & Ryan J. Tibshirani & Larry Wasserman, 2018. "Distribution-Free Predictive Inference for Regression," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 113(523), pages 1094-1111, July.
    19. Victor Chernozhukov & Kaspar Wüthrich & Yinchu Zhu, 2021. "An Exact and Robust Conformal Inference Method for Counterfactual and Synthetic Controls," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1849-1864, October.
    20. Matias D. Cattaneo & Yingjie Feng & Rocio Titiunik, 2021. "Prediction Intervals for Synthetic Control Methods," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1865-1880, October.
    21. Ivan A Canay & Vishal Kamat, 2018. "Approximate Permutation Tests and Induced Order Statistics in the Regression Discontinuity Design," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(3), pages 1577-1608.
    22. Cyrus J. DiCiccio & Joseph P. Romano, 2017. "Robust Permutation Tests For Correlation And Regression Coefficients," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 112(519), pages 1211-1220, July.
    23. Lihua Lei & Emmanuel J. Candès, 2021. "Conformal inference of counterfactuals and individual treatment effects," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 83(5), pages 911-938, November.
    24. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    25. Zhao, Anqi & Ding, Peng, 2021. "Covariate-adjusted Fisher randomization tests for the average treatment effect," Journal of Econometrics, Elsevier, vol. 225(2), pages 278-294.
    26. Miller, Joshua Benjamin & Sanjurjo, Adam, 2018. "Surprised by the Hot Hand Fallacy? A Truth in the Law of Small Numbers," OSF Preprints sv9x2, Center for Open Science.
    27. Jason Wu & Peng Ding, 2021. "Randomization Tests for Weak Null Hypotheses in Randomized Experiments," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1898-1913, October.
    28. Xinran Li & Peng Ding & Qian Lin & Dawei Yang & Jun S. Liu, 2019. "Randomization Inference for Peer Effects," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 114(528), pages 1651-1664, October.
    29. David, Herbert A., 2008. "The Beginnings of Randomization Tests," The American Statistician, American Statistical Association, vol. 62, pages 70-72, February.
    30. Joshua B. Miller & Adam Sanjurjo, 2018. "Surprised by the Hot Hand Fallacy? A Truth in the Law of Small Numbers," Econometrica, Econometric Society, vol. 86(6), pages 2019-2047, November.
    31. Alwyn Young, 2019. "Channeling Fisher: Randomization Tests and the Statistical Insignificance of Seemingly Significant Experimental Results," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 557-598.
    32. Young, Alwyn, 2024. "Asymptotically robust permutation-based randomization confidence intervals for parametric OLS regression," European Economic Review, Elsevier, vol. 163(C).
    33. Cousido-Rocha, Marta & de Uña-Álvarez, Jacobo & Hart, Jeffrey D., 2019. "A two-sample test for the equality of univariate marginal distributions for high-dimensional data," Journal of Multivariate Analysis, Elsevier, vol. 174(C).
    34. Kennedy, Peter E, 1995. "Randomization Tests in Econometrics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 85-94, January.
    35. Lan Wang & Bo Peng & Runze Li, 2015. "A High-Dimensional Nonparametric Multivariate Test for Mean Vector," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 110(512), pages 1658-1669, December.
    36. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    37. Ivan A. Canay & Joseph P. Romano & Azeem M. Shaikh, 2017. "Randomization Tests Under an Approximate Symmetry Assumption," Econometrica, Econometric Society, vol. 85, pages 1013-1030, May.
    38. David M Ritzwoller & Joseph P Romano, 2022. "Uncertainty in the Hot Hand Fallacy: Detecting Streaky Alternatives to Random Bernoulli Sequences [A Statistical Analysis of Hitting Streaks in Baseball]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(2), pages 976-1007.
    39. Thomas B. Berrett & Yi Wang & Rina Foygel Barber & Richard J. Samworth, 2020. "The conditional permutation test for independence while controlling for confounders," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 82(1), pages 175-197, February.
    40. Yuehao Bai & Joseph P. Romano & Azeem M. Shaikh, 2022. "Inference in Experiments With Matched Pairs," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 117(540), pages 1726-1737, October.
    41. Max Cytrynbaum, 2021. "Optimal Stratification of Survey Experiments," Papers 2111.08157, arXiv.org, revised Aug 2023.
    42. G W Basse & A Feller & P Toulis, 2019. "Randomization tests of causal effects under interference," Biometrika, Biometrika Trust, vol. 106(2), pages 487-494.
    43. Jesse Hemerik & Jelle Goeman, 2018. "Exact testing with random permutations," TEST: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 27(4), pages 811-825, December.
    44. David Puelz & Guillaume Basse & Avi Feller & Panos Toulis, 2022. "A graph‐theoretic approach to randomization tests of causal effects under general interference," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 84(1), pages 174-204, February.
    45. Jesse Hemerik & Jelle J. Goeman & Livio Finos, 2020. "Robust testing in generalized linear models by sign flipping score contributions," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 82(3), pages 841-864, July.
    46. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    47. Aaditya Ramdas & Rina Foygel Barber & Emmanuel J. Candès & Ryan J. Tibshirani, 2023. "Permutation Tests Using Arbitrary Permutation Distributions," Sankhya A: The Indian Journal of Statistics, Springer;Indian Statistical Institute, vol. 85(2), pages 1156-1177, August.
    48. Chung, EunYi & Romano, Joseph P., 2016. "Multivariate and multiple permutation tests," Journal of Econometrics, Elsevier, vol. 193(1), pages 76-91.
    49. repec:cup:cbooks:9780521885881 is not listed on IDEAS
    50. Janssen, Arnold, 1997. "Studentized permutation tests for non-i.i.d. hypotheses and the generalized Behrens-Fisher problem," Statistics & Probability Letters, Elsevier, vol. 36(1), pages 9-21, November.
    51. Ibragimov, Rustam & Müller, Ulrich K., 2010. "t-Statistic Based Correlation and Heterogeneity Robust Inference," Journal of Business & Economic Statistics, American Statistical Association, vol. 28(4), pages 453-468.
    52. Chung, EunYi & Olivares, Mauricio, 2021. "Permutation test for heterogeneous treatment effects with a nuisance parameter," Journal of Econometrics, Elsevier, vol. 225(2), pages 148-174.
    53. Ivan A. Canay & Andres Santos & Azeem M. Shaikh, 2021. "The Wild Bootstrap with a “Small†Number of “Large†Clusters," The Review of Economics and Statistics, MIT Press, vol. 103(2), pages 346-363, May.
    54. Yao Zhang & Qingyuan Zhao, 2023. "What is a Randomization Test?," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 118(544), pages 2928-2942, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Young, Alwyn, 2024. "Asymptotically robust permutation-based randomization confidence intervals for parametric OLS regression," European Economic Review, Elsevier, vol. 163(C).
    2. Young, Alwyn, 2024. "Asymptotically robust permutation-based randomization confidence intervals for parametric OLS regression," LSE Research Online Documents on Economics 120933, London School of Economics and Political Science, LSE Library.
    3. Zhao, Anqi & Ding, Peng, 2021. "Covariate-adjusted Fisher randomization tests for the average treatment effect," Journal of Econometrics, Elsevier, vol. 225(2), pages 278-294.
    4. Yuehao Bai & Azeem M. Shaikh & Max Tabord-Meehan, 2024. "A Primer on the Analysis of Randomized Experiments and a Survey of some Recent Advances," Papers 2405.03910, arXiv.org.
    5. Heckman, James & Pinto, Rodrigo & Shaikh, Azeem M., 2024. "Dealing with imperfect randomization: Inference for the highscope perry preschool program," Journal of Econometrics, Elsevier, vol. 243(1).
    6. Purevdorj Tuvaandorj, 2021. "Robust Permutation Tests in Linear Instrumental Variables Regression," Papers 2111.13774, arXiv.org, revised Jul 2024.
    7. MacKinnon, James G. & Nielsen, Morten Ørregaard & Webb, Matthew D., 2023. "Cluster-robust inference: A guide to empirical practice," Journal of Econometrics, Elsevier, vol. 232(2), pages 272-299.
    8. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    9. Ganesh Karapakula, 2023. "Stable Probability Weighting: Large-Sample and Finite-Sample Estimation and Inference Methods for Heterogeneous Causal Effects of Multivalued Treatments Under Limited Overlap," Papers 2301.05703, arXiv.org, revised Jan 2023.
    10. David M. Ritzwoller & Joseph P. Romano, 2019. "Uncertainty in the Hot Hand Fallacy: Detecting Streaky Alternatives to Random Bernoulli Sequences," Papers 1908.01406, arXiv.org, revised Apr 2021.
    11. Hagemann, Andreas, 2019. "Placebo inference on treatment effects when the number of clusters is small," Journal of Econometrics, Elsevier, vol. 213(1), pages 190-209.
    12. Han, Kevin & Basse, Guillaume & Bojinov, Iavor, 2024. "Population interference in panel experiments," Journal of Econometrics, Elsevier, vol. 238(1).
    13. Cai Yong & Canay Ivan A. & Kim Deborah & Shaikh Azeem M., 2023. "On the Implementation of Approximate Randomization Tests in Linear Models with a Small Number of Clusters," Journal of Econometric Methods, De Gruyter, vol. 12(1), pages 85-103, January.
    14. Zhao, Anqi & Ding, Peng, 2024. "No star is good news: A unified look at rerandomization based on p-values from covariate balance tests," Journal of Econometrics, Elsevier, vol. 241(1).
    15. Dmitry Arkhangelsky & Guido Imbens, 2023. "Causal Models for Longitudinal and Panel Data: A Survey," Papers 2311.15458, arXiv.org, revised Jun 2024.
    16. Yuehao Bai & Joseph P. Romano & Azeem M. Shaikh, 2022. "Inference in Experiments With Matched Pairs," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 117(540), pages 1726-1737, October.
    17. Guillermo Cruces & Dario Tortarolo & Gonzalo Vazquez-Bare, 2022. "Design of two-stage experiments with an application to spillovers in tax compliance," IFS Working Papers W22/32, Institute for Fiscal Studies.
    18. Haoge Chang, 2023. "Design-based Estimation Theory for Complex Experiments," Papers 2311.06891, arXiv.org.
    19. Ferman, Bruno, 2021. "Matching estimators with few treated and many control observations," Journal of Econometrics, Elsevier, vol. 225(2), pages 295-307.
    20. Guido W. Imbens & Davide Viviano, 2023. "Identification and Inference for Synthetic Controls with Confounding," Papers 2312.00955, arXiv.org.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2406.09521. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.