Open AccessJournal Article
Evaluating State Programmes: "Natural Experiments" and Propensity Scores*
TL;DR: In this paper, the authors describe the key ideas of the Propensity Score method and illustrate its application by re-analysis of some Irish data on training courses, which is widely applied in epidemiology and related fields, focusing on the idea that matching individuals in the groups should be compared.
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Abstract: Evaluations of programmes — for example, labour market interventions such as employ- ment schemes and training courses — usually involve comparison of the performance of a treatment group (recipients of the programme) with a control group (non-recipients) as regards some response (gaining employment, for example). But the ideal of randomisation of individuals to groups is rarely possible in the social sciences and there may be substantial differences between groups in the distributions of individual characteristics that can affect response. Past practice in economics has been to try to use multiple regression models to adjust away the differences in observed charac- teristics, while also testing for sample selection bias. The Propensity Score approach, which is widely applied in epidemiology and related fields, focuses on the idea that "matching" individuals in the groups should be compared. The appropriate matching measure is usually taken to be the prior probability of programme participation. This paper describes the key ideas of the Propensity Score method and illustrates its application by reanalysis of some Irish data on training courses.
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