Discussion paper

DP11390 FROM LATE TO MTE: ALTERNATIVE METHODS FOR THE EVALUATION OF POLICY INTERVENTIONS

This paper provides an introduction into the estimation of Marginal Treatment
Effects (MTE). Compared to the existing surveys on the subject, our paper is less technical and
speaks to the applied economist with a solid basic understanding of econometric techniques
who would like to use MTE estimation. Our framework of analysis is a generalized Roy model
based on the potential outcomes framework, within which we define different treatment effects
of interest, and review the well-known case of IV estimation with a discrete instrument
resulting in a local average treatment effect (LATE). Turning to IV estimation with a
continuous instrument we demonstrate that the 2SLS estimator may be viewed as a weighted
average of LATEs, and discuss MTE estimation as an alternative and more informative way of
exploiting a continuous instrument. We clarify the assumptions underlying the MTE
framework and illustrate how the MTE estimation is implemented in practice.

£6.00
Citation

Dustmann, C, T Cornelissen, A Raute and U Schonberg (2016), ‘DP11390 FROM LATE TO MTE: ALTERNATIVE METHODS FOR THE EVALUATION OF POLICY INTERVENTIONS‘, CEPR Discussion Paper No. 11390. CEPR Press, Paris & London. https://cepr.org/publications/dp11390