On the inefficiency of propensity score matching
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- Frölich, M. AStA (2007) 91: 279. doi:10.1007/s10182-007-0035-0
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Propensity score matching is now widely used in empirical applications for estimating treatment effects. Propensity score matching (PSM) is preferred to matching on X because of the lower dimension of the estimation problem. In this note, however, it is shown that PSM is inefficient compared to matching on X. Hence, matching on X should be considered as a serious alternative.