Re: st: treatreg (specification of indepvars_t)

[Partha Deb <partha.deb@hunter.cuny.edu>]

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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