Selection bias emerges in observational data because.

When we see two groups of people to which different treatments were applied without randomization we observe ( | ) ( | ) ( | ) ( | ) ( | ) ( | )

Where (

|

)

(

|

) is the average treatment among the treated and

( | ) ( | ) is selection bias, that is, is the difference in the expected outcome between those treated and not treated had they not been treated.

--------Random Selection Solves this problem Consider that due to the law of grate numbers the probability of being selected into the control and experimental group are going to be independent. Therefore, in large numbers ( | ) ( | )

And therefore ( | And ( | causal effect. ) ) ( | ( | ) ) ( | ( ) | ( | ) ) ( ( | ) ( | )

) which is th average

.ASSUMPTIONS. a) Unit homogeneity. that the response is equal over time ( | ) ( | ) ( | ) this is. that the expected value of the outcome variable Y measured in unit i at time t would be the same if measured at time t+1. this is. b) Causal trasiendanse: this is that measurement at time t does not affect measurement at time t+1 In between subject designs thae experimenter makes only one assumption. A within subject design makes two main assumptions: a) Temporal Stability. that can be formally expressed as: ( | ) ( | ) This is accomplished through randomization.

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