Scandinavian Working Papers in Economics

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

No 3/2020: Identification of the average treatment effect when SUTVA is violated

Lukáš Lafférs () and Giovanni Mellace ()
Additional contact information
Lukáš Lafférs: Department of Mathematics, Postal: Matej Bel University
Giovanni Mellace: Department of Business and Economics, Postal: University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark

Abstract: The stable unit treatment value assumption (SUTVA) ensures that only two potential outcomes exist and that one of them is observed for each individual. After providing new insights on SUTVA validity, we derive sharp bounds on the average treatment effect (ATE) of a binary treatment on a binary outcome as a function of the share of units, a, for which SUTVA is potentially violated. Then we show how to compute the maximum value of a such that the sign of the ATE is still identified. After decomposing SUTVA into two separate assumptions, we provide weaker conditions that might help sharpening our bounds. Furthermore, we show how some of our results can be extended to continuous outcomes. Finally, we estimate our bounds in two well known experiments, the U.S. Job Corps training program and the Colombian PACES vouchers for private schooling.

Keywords: SUTVA; Bounds; Average treatment effect; Sensitivity analysis

JEL-codes: C14; C21; C31

32 pages, March 4, 2020

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