ITT vs TOT vs Late.

Which is larger, when are they equal?

ITT will always be less than or equal to LATE in terms of magnitude.

Mathematically this must be so, LATE is equal to ITT divided by the First Stage. ITT is the effect
of the instrument z (offering treatment) on Y. The First Stage is a number between 0 and 1 and
is equivalent to D regressed on Z, the take up rate. When you divide ITT by a number between 0
and 1; the result must be larger than ITT. You can test this, 2 divided by 0.5 is 4. This
mathematical formula also tells you two additional things, 1 they are equal when the first stage
is equal to 1 IE take up = 100%. 2, it tells us that the FS can never equal 0 or LATE would be
equal to infinity, this is one of our four assumptions for LATE!

TOT and LATE could be either way.

TOT is the effect of D on Y (incudes always takers and compliers). LATE is the effect of D on Y
through only Z (the effect for the compliers). TOT and LATE depends are the averages, so it
depends if you think the effect is larger for the compliers or the always takers. If you think the
effect is larger for always takers, and since TOT includes always takers, the average effect is
larger- IE TOT will be larger than LATE. If you think the treatment is smaller for always takers,
the average effect with them included will be smaller, and therefore TOT will be less than LATE.
They are equal when there are no always takers.

ITT will always be less than or equal in magnitude to TOT.

This is because some people you are intending to treat won’t actually get the treatment, IE they
get the voucher Z but never use it to get whatever your treatment is D, and some people in the
TOT get D even though they were not assigned it through Z. Therefore, the magnitude of the
effect is “watered down”. They will be equal when there is 100% take up and there are no
always takers.

With these three equality properties you can see how they naturally build upon each other.