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On Recoding Ordered Treatments as Binary Indicators

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  • Evan K. Rose
  • Yotam Shem-Tov

Abstract

Researchers using instrumental variables to investigate ordered treatments often recode treatment into an indicator for any exposure. We investigate this estimand under the assumption that the instruments shift compliers from no treatment to some but not from some treatment to more. We show that when there are extensive margin compliers only (EMCO) this estimand captures a weighted average of treatment effects that can be partially unbundled into each complier group's potential outcome means. We also establish an equivalence between EMCO and a two-factor selection model and apply our results to study treatment heterogeneity in the Oregon Health Insurance Experiment.

Suggested Citation

  • Evan K. Rose & Yotam Shem-Tov, 2024. "On Recoding Ordered Treatments as Binary Indicators," NBER Working Papers 32234, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32234
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    More about this item

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation

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