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2001 Lawrence R. Klein Lecture Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice*
Author(s) -
Carneiro Pedro,
Hansen Karsten T.,
Heckman James J.
Publication year - 2003
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-1-00074
Subject(s) - counterfactual conditional , lisrel , veil of ignorance , econometrics , economics , matching (statistics) , pairwise comparison , probit model , actuarial science , mathematics , statistics , psychology , microeconomics , structural equation modeling , counterfactual thinking , social psychology , economic justice
This article uses factor models to identify and estimate the distributions of counterfactuals. We extend LISREL frameworks to a dynamic treatment effect setting, extending matching to account for unobserved conditioning variables. Using these models, we can identify all pairwise and joint treatment effects. We apply these methods to a model of schooling and determine the intrinsic uncertainty facing agents at the time they make their decisions about enrollment in school. We go beyond the “Veil of Ignorance” in evaluating educational policies and determine who benefits and who loses from commonly proposed educational reforms.