## Abstract

This paper presents a method of calculating sharp bounds on the average treatment effect using linear programming under identifying assumptions commonly used in the literature. This new method provides a sensitivity analysis of the identifying assumptions and missing data in two applications. The first application looks at the effect of parents’ schooling on children’s schooling, and the second application studies the effect of mandatory arrest policy on domestic violence recidivism. This paper shows that even a mild departure from identifying assumptions may substantially widen the bounds on average treatment effects. Allowing for a small fraction of the data to be missing also has a large impact on the results.

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## Notes

- 1.
Formally, the population forms a probability space \((I,\mathcal {F},P)\), where the population of individuals

*I*is the sample space, \(\mathcal {F}\) is a set of events and*P*is a probability measure. Hence, the only source of randomness is the choice of individual. The individual’s behavior is deterministic. - 2.
Available at http://www.ssc.wisc.edu/wlsresearch/.

- 3.
The assumption that the outcome is a deterministic function of a treatment is intrinsic in the potential outcome framework of Rubin (1974).

- 4.
Ordinary least squares regression analysis assumes exogenous treatment selection: \(\forall t_1, t_2: E[Y(t)|D = t_1] = E[Y(t)|D = t_2]\), and it point identifies the average potential outcome: \(E[Y(t)] = E[Y(t)| D = t]P(D = t) + E[Y(t)| D \ne t]P(D \ne t) = E[Y(t)| D = t]\).

- 5.
The confidence sets that cover the whole identified set asymptotically are generally larger and may be preferable for a policymaker concerned with robust decisions, as argued in Henry and Onatski (2012).

- 6.
The estimates of bounds in first column in this table are the same as in Table 1 in Lafférs (2013b).

- 7.
- 8.
We used a scalar relaxation parameter \(\alpha _{cMTS}\) for simplicity. An extension to a vector parameter is straightforward.

- 9.
From the dataset, we get an estimate \(\hat{p}_n\) of the true and unknown

*p*, where*n*is the sample size. - 10.
The inequalities \(g(\bar{p},p,\alpha _{MISS}) \le 0\) ensure that \(p_{MISS} \in \mathcal {P}\) (\(p_{MISS}\) is a proper probability distribution) in the definition (MISS) of the set \(\mathcal {P}_{MISS}\):

$$\begin{aligned} \begin{aligned} \forall i = 1,\dots ,K: \ \ \ g_i(\bar{p},p,\alpha _{MISS})&= \left( (1-\alpha _{MISS})p_1 - \bar{p}_1 \right) /\alpha _{MISS}, \\ g_{K+1}(\bar{p},p,\alpha _{MISS})&= \bar{p}_1 + \dots + \bar{p}_K - 1,\\ g_{K+2}(\bar{p},p,\alpha _{MISS})&= -(\bar{p}_1 + \dots + \bar{p}_K) + 1. \\ \end{aligned} \end{aligned}$$ - 11.
- 12.
The MDVE was followed by experiments in six other cities (Atlanta, Charlotte, Colorado Springs, Metro-Date, Omaha and Milwaukee) with different types of treatment assignments. Sherman et al. (1992) compares the results of five of these experiments. The arrest/non-arrest grouping makes the results comparable with experiments with different research designs.

- 13.
Given that

*Z*is randomly assigned, conditioning on*Z*gives us the same assumption as the unconditional one.$$\begin{aligned} \begin{aligned}&E[Y(t)|V=0 ] = E[Y(t) | Z=t, V = 0] P(Z=t|V=0) = E[Y(t) | Z=t, V = 0] P(Z=t) \\&E[Y(t)|V=1 ] = E[Y(t) | Z=t, V = 1] P(Z=t|V=1) = E[Y(t) | Z=t, V = 1] P(Z=t) \\&E[Y(t)|Z=t, V=0 ] \le E[Y(t)|Z=t, V=1 ] \iff E[Y(t)|V=0 ] \le E[Y(t)|V=1 ]. \end{aligned} \end{aligned}$$ - 14.
For more references, see the footnote 2 in Lafférs (2013b).

- 15.
Also, the MIV assumption is made conditional on the value of the treatment assigned (\(Z=z\)), which we highlighted by labeling this assumption as cMIV (conditional MIV).

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## Acknowledgements

This research was supported by VEGA Grant 1/0843/17. This paper is a revised chapter from my 2014 dissertation at the Norwegian School of Economics. I would like to thank Monique de Haan for generously providing me with the data used in this paper, as well as Christian Brinch, Andrew Chesher, Christian Dahl, Gernot Doppelhofer, Charles Manski, Peter Molnar, Adam Rosen, Erik Sorensen, Ivan Sutoris and Alexey Tetenov for valuable feedback. Special thanks goes to the referees and the editor for carefully reading through the manuscript and for suggesting the second application.

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Lafférs, L. Bounding average treatment effects using linear programming.
*Empir Econ* **57, **727–767 (2019). https://doi.org/10.1007/s00181-018-1474-z

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### Keywords

- Partial identification
- Bounds
- Average treatment effect
- Sensitivity analysis
- Linear programming

### JEL Classification

- C4
- C6
- I2