New method allows accurate estimation of treatment effects in social research.
The article discusses a method to estimate the impact of unknown factors on outcomes in a scientific model. By using a variable that influences the selection process, researchers can identify the distribution of potential outcomes. This allows for the estimation of models with endogenous and mismeasured variables. The approach involves using simple weighted averages, GMM, or two stage least squares. The findings of the study include applications to estimating the effects of firm investments and schooling on wages.