Nonlinear Statistical Modeling: Proceedings of the Thirteenth International Symposium in Economic Theory and Econometrics: Essays in Honor of Takeshi Amemiya

Abstract

The book is dedicated to Takeshi Amemiya in honour of his 65th birthday to celebrate his outstanding contribution to econometrics. The volume contains important advances in The first chapter by J. Heckman and E. J. Vytlacil, unites the treatment effect literature and the latent variable literature. They show how the marginal treatment effect (MTE) parameter introduced by Heckman (1997)may be used in a latent variable framework to generate the average treatment effect (ATE), the effect of treatment on the treated (TT) as well as the local average treatment effect (LATE) proposed by Imbens and Angrist (1994). The method of local instrumental variables (LIV) introduced by Heckman and Vytlacil (1999) estimates the MTE parameter and therefore may be used to estimate all the conventional Treatment effect parameter when these are identified and the index condition holds. The authors apply these treatment effect concepts to the Roy model of self‐selection, and illustrates how the LIV parameter can be used to identify normalised versions of the cost and benefit functions for that model. It also discusses the relative merits of the various treatment effect concepts in traditional cost‐benefit analysis of social policy.