Sensitivity Analysis in Practice: Altonji-Elder-Taber, Krauth, and Oster

What does it look like to actually apply sensitivity analysis and partial identification in empirical work? This video walks through three landmark papers that operationalize the idea that selection on observables can inform us about selection on unobservables. Slides used in the video are available here: https://raw.githack.com/tyleransom/st... Source code for the slides is here: https://github.com/tyleransom/structu... We begin with the pioneering 2005 Journal of Political Economy paper by Altonji, Elder, and Taber, which introduced the equal correlation restriction. Their main idea is that when survey data are collected for multiple purposes, observed covariates can reasonably be treated as a random subset of all factors affecting the outcome. This provides a disciplined basis for comparing selection on observables versus unobservables. We then cover Brian Krauth's 2016 paper in the Journal of Econometric Methods, which generalizes the AET framework via relative correlation restrictions. Krauth introduces a scalar parameter governing the ratio of unobservable to observable selection, implemented in a Stata package, and shows how to ask: how large would this ratio need to be before my estimated effect disappears? Finally, we cover Emily Oster's 2019 paper in the Journal of Business and Economic Statistics, which links coefficient stability to R-squared movements. The approach reasons about how much room remains for unobservables given how much variation observables already explain. Note that with measurement error in the outcome plays an important role by placing a ceiling on the maximum achievable R-squared. Papers referenced: Altonji, Joseph G., Todd E. Elder, and Christopher R. Taber. 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools." Journal of Political Economy 113 (1): 151–184. https://doi.org/10.1086/426036 Krauth, Brian. 2016. "Bounding a Linear Causal Effect Using Relative Correlation Restrictions." Journal of Econometric Methods 5 (1): 117–141. https://doi.org/10.1515/jem-2013-0013 Oster, Emily. 2019. "Unobservable Selection and Coefficient Stability: Theory and Evidence." Journal of Business and Economic Statistics 37 (2): 187–204. https://doi.org/10.1080/07350015.2016... Tyler Ransom is an Associate Professor of Economics at the University of Oklahoma. Subscribe for more videos on data science, econometrics, and research methods! #sensitivityanalysis #econometrics #partialidentification #selectiononobservables #selectiononunobservables #omittedvariablebias #AltonjiElderTaber #relativecorrelationrestrictions #Krauth2016 #Oster2019 #coefficientstability #Rsquaredmovements #equalcorrelationrestriction #treatmenteffectestimation #causalinference #observationaldata #endogeneity #confoundingvariables #unobservableselection #appliedmicroeconometrics #identificationwithoutinstruments #noinstrumentalvariable #boundingtreatmenteffects #robustnesschecks #empiricaleconomics #structuraleconometrics #Catholicschooleffect #AETmethod #psacalcStata #osterStatacommand #rcrStatapackage #selectionbias #measurementerroroutcomes #maximumRsquared #proportionalselection #observablecontrols #graduateeconometrics #PhDeconometrics #appliedeconomicsmethods #causaleffectestimation #crosssectionalidentification #surveydataeconometrics #JournalofPoliticalEconomy #JournalofBusinessandEconomicStatistics #JournalofEconometricMethods #treatmentendogeneity #observationalstudymethods #policyevaluation #microeconometrics #identificationstrategy #unconfoundedness #regressionrobustness #sensitivitybounds #partialidentificationmethods #AltonjiElderTaber2005 #Ostercoefficientstability #Krauthrelativecorrelation #lambdasensitivity #selectionmodel #correlatedunobservables #selectioncorrection #regressionanalysis #OLSbias #biasbounding #controlvariables #econometricslecture #econometricstutorial #graduateeconomicslecture #UniversityofOklahomaeconomics #structuralecon #Stataeconometrics #appliedeconometricsPhD #econometricsseries #economicsresearchmethods #reproducibleresearch #empiricalstrategy #identificationassumption #observationalcausalinference #quasiexperimentalmethods #nonexperimentaldata #treatmentselection #covariateadjustment #reducedformeconometrics #sensitivitytounobservables #unobservedheterogeneity