Propensity Score. Overview: What do we use a propensity score for? How do we construct the propensity score? How do we implement propensity score estimation in STATA?. Joke (kind of…). Two heart surgeons (Jack and Jill) walk into a bar. Jack: “I just finished my 100 th heart surgery!”
Where X is a matrix of covariates that you think affect the probability
of receiving a scholarship.
If so stop, you’re done with the first stage
Multiple methods for estimating the propensity score
pscore treat X1 X2 X3…, pscore(scorename)
attr outcome treat, pscore(scorename)
Dehejia, Rajeev H. and SadekWahba (1999). “Causal Effects in Nonexperimental Studies: Reevaluating the Evaluation of Training Programs”. Journal of the American Statistical Association, vol. 94(448): 1053-1062
Dehejia, Rajeev H. and SadekWahba (2002). “Propensity Score-Matching Methods for Nonexperimental Causal Studies”. The Review ofEconomics and Statistics. February, 84(1): 151-161.
These two studies introduce propensity score matching methods to economists and perform a kind of replication of LaLonde’s study