Scandinavian Working Papers in Economics

Discussion Papers on Economics,
University of Southern Denmark, Department of Economics

No 2/2023: Limited Monotonicity and the Combined Compliers LATE

Nadja van ’t Hoff (), Arthur Lewbel () and Giovanni Mellace ()
Additional contact information
Nadja van ’t Hoff: Department of Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Arthur Lewbel: Economics Department, Postal: MORRISSEY COLLEGE OF ARTS AND SCIENCES, Gasson Hall, 140 Commonwealth Avenue, Chestnut Hill, MA 02467
Giovanni Mellace: Department of Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: We consider estimating a local average treatment effect given an endogenous binary treat ment and two or more valid binary instruments. We propose a novel limited monotonicity assumption that is generally weaker than alternative monotonicity assumptions considered in the literature, and allows for a great deal of choice heterogeneity. Using this limited mono tonicity, we define and identify the Combined Complier Local Average Treatment Effect (CC-LATE), which is arguably a more policy relevant parameter than the weighted average of LATEs identified by Two Stage Least Squares. We apply our results to estimate the effect of learning one’s HIV status on protective behaviors.

Keywords: Instrumental variable; Local Average Treatment Effect; monotonicity; multiple instruments.

JEL-codes: C14; C21; C26

Language: English

54 pages, May 24, 2023

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