Estimating and Using Propensity Score in Presence of Missing Background Data. An Application to Assess the Impact of Childbearing on Wellbeing

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1 Estimating and Using Propensity Score in Presence of Missing Background Data. An Application to Assess the Impact of Childbearing on Wellbeing Alessandra Mattei Dipartimento di Statistica G. Parenti Università degli Studi di Firenze

2 Outline 1. Motivation of the study 2. Estimating causal effects through a quasi-experimental approach 3. Estimating propensity scores with incomplete data 4. Estimating the causal effects of a childbearing on economic wellbeing in Indonesia using the Indonesia Family Life Survey (IFLS) 5. Concluding remarks

3 Motivation of the Study We compare three different approaches of handling missing background data in the estimation and use of propensity scores: 1. A complete-case analysis 2. A pattern-mixture model based approach developed by Rosenbaum and Rubin (1984) 3. A multiple imputation approach We make explicit the assumptions underlying each approach by illustrating the interaction between the treatment assignment mechanism and the missing data mechanism We apply these methods to assess the impact of childbearing events on individuals wellbeing in Indonesia, using a sample of women from the Indonesia Family Life Survey

4 The Quasi-Experimental Approach We use appropriate econometric techniques based on longitudinal micro data in order to identify the causal effects of childbearing events on poverty We consider the endogenous variable of interest, here change in fertility, as treatment variable Z, and divides individuals into two groups: those who experienced a childbirth - the treatment group, indicated by Z = T, and those who did not - the control group, indicated by Z = C The outcome variable, say Y, is a measure of wellbeing Strong Ignorability Assumption (Rosenbaum and Rubin, 1983) (i) Z is independent of the potential outcomes (Y (C), Y (T)) conditional on X = x (Unconfoundedness Assumption) (ii) η < Pr(Z = 1 X = x) < 1 η, for some η > 0

5 The Unconfoundedness Assumption The unconfoundedness assumption requires that all variables that affect both outcome and the likelihood of receiving the treatment are observed or that all the others are perfectly collinear with the observed ones This assumption is not testable, it is a very strong assumption, and one that need not generally be applicable Selection may also take place on the basis of unobservable characteristics We view it as a useful starting point for two reasons 1. In our study, we have carefully investigated which variables are most likely to confound any comparison between treated and control units 2. Any alternative assumptions that not rely on unconfoundedness, while allowing for consistent estimation of the causal effects of interest, must make alternative untestable assumptions

6 The Propensity Score The propensity score is the conditional probability of receiving a particular treatment (Z = T) versus control (Z = C) given a vector of observed covariates, X, e = e(x) = Pr (Z = T X) Balancing of pre-treatment variables given the propensity score If e(x) is the propensity score, then Z X e(x) Unconfoundedness given the propensity score Z (Y (C), Y (T)) X = Z (Y (C), Y (T)) e(x)

7 Notation Let the response indicator be 1, if the value of the k covariate for the ith subject is observed R ik = 0, if the value of the k covariate for the ith subject is missing for i = 1,...,N and k = 1,...,K. Let X = (X obs,x mis ), where X obs = {X ik : R ik = 1} e X mis = {X ik : R ik = 0}

8 Estimating Propensity Score with Incomplete Data It is not clear how the propensity score should be estimated when some covariate values are missing The missingness itself may be predictive about which treatment is received Any technique for estimating propensity score in the presence of covariate missing data will have to either make a stronger assumption regarding ignorability of the assignment mechanism or will have to make an assumption about the missing data mechanism In order to have ignorability of the assignment mechanism, for all of the techniques here described, we will maintain the following assumption: Pr (Z X, R, Y (C), Y (T)) = Pr (Z X, R)

9 Complete-Data Analysis A complete-data analysis uses only observations where all variables are observed To make valid causal inferences with this approach we require that data is Missing Completely At Random (MCAR, Little and Rubin): 1987): Pr(R X, Z) = Pr(R) Note that This means that the units removed from the data set, those with missing data, are just a simple random sample of the other Pr (Z X, R, Y (C), Y (T)) = Pr (Z X, R) and Pr(R X, Z) = Pr(R) Pr (Z X, R, Y (C), Y (T)) = Pr (Z X)

10 Rosenbaum - Rubin Approach The Propensity Scores with Incomplete Data The generalized propensity score, which conditions on all of the observed covariate information, is ( ) e = e (X obs, R) = Pr Z = T X obs, R Balancing of pre-treatment variables given the generalized propensity score ( ) Z X obs, R e (X obs, R) Unconfoundedness given the generalized propensity score ( ) Z (Y (C), Y (T)) X obs, R = Z (Y (C), Y (T)) e (X obs, R)

11 Rosenbaum - Rubin Approach Assumptions The Rosenbaum-Rubin method relies on either one of the following assumptions: Pr(Z X, R) Pr(Z X obs,x mis, R) = Pr(Z X obs, R) or Pr(Y (C), Y (T) X, R) Pr(Y (C), Y (T) X obs,x mis, R) = Pr(Y (C), Y (C) X obs, R) The Rosenbaum - Rubin method does not make any assumption about the missing data mechanism

12 Drawbacks Rosenbaum - Rubin Approach The Rosenbaum - Rubin method does assume that either all missing covariate values are independent of the the assignment mechanism conditional on the missing data patterns or or that they are independent of the potential outcomes conditional on observed covariate values and the missing data patterns Since the Rosenbaum - Rubin method specifies one model for both handling missing data and estimating propensity scores, it is not possible to incorporate the outcome variable Y into this model even though it might provide useful information about missing values

13 Multiple Imputation and Propensity Score Methods The latent ignorability of the assignment mechanism Using Multiple Imputation (MI) to handling incomplete data covariates, we essentially assume the latent ignorability of the assignment mechanism Pr(Z X, R, Y (C), Y (T)) = Pr(Z X). In our case, the assignment mechanism is ignorable only conditional on complete covariate data (which includes, of course, values that in practice are missing) Computationally, this is achieved by filling in the missing covariate values using MI

14 Multiple Imputation and Propensity Score Methods Assumptions on the assignment mechanism Imputations may in principle be created under any kind of model for the missing data mechanism, and the resulting inferences will be valid under that mechanism (Rubin, 1987) In our application, MI was performed assuming that the missing observations are Missing At Random (MAR), that is, Pr(R X, Z, Y (C), Y (T)) = Pr(R X obs, Z, Y obs ), where Y obs = [ ] Yi obs n, Y obs i=1 i = I{Z i = T }Y i (T) + I{Z i = C}Y i (C) This MAR assumption involves all the observed variables In our application, we perform MI in two way: including Y in the model, and not including Y in the imputation model

15 Multiple Imputation and Propensity Score Methods Estimators Let ÂTT l and se 2 l denote the point estimate and variance respectively from the lth (l = 1,..., m) dataset. Then, m ÂTT = 1 m ÂTT l ) V ar (ÂTT l=1 = se 2 W + se 2 B ( ) m where se 2 W = 1 m m l=1 se2 l Within-imputation variance se 2 B = 1 m 1 m l=1 (ÂTTl ÂTT ) 2 Between-imputation variance In our application, MI was performed using the mvis module in STATA (Patrick Royston, 2004), which is based on MICE method of multiple multivariate imputation (van Buuren et al., 1999)

16 Matching Estimators of the ATT Effect based on the Propensity Score The Nearest Neighbor Matching Estimator The Kernel Matching Estimator The Stratification Matching Estimator Irrespective of the method of handling missing data, the propensity score analysis is implemented by the use of the pscore module in STATA written by Becker and Ichino (2000)

17 The Indonesia Family Life Survey Data The IFLS consists of three waves (1993, 1997, 2000) plus a special wave (1998), which we will not use in our study We will use a subsample of panel ever-married women age In our study the outcome variable is a measure of monetary wellbeing, given by the annual value of the total household consumption expenditures adjusted for price variability across space and time and household heterogeneity Adjustment for price variability We divided the nominal consumption expenditures by the national consumption price index (IFS, 2002) Adjustment for household heterogeneity We adjust our income-based measure of wellbeing for household heterogeneity by applying the following equivalence scale: Total number of persons in the household

18 The Outcome Variable Descriptive statistics of total net equivalised household consumption expenditures in 2000 (Rupiah in thousands) by number of live births Consumption expenditures (Rupiah in thousands) Live births Obs mean s.d. median At least a live birth , Rupiah = 1 USA$ Note that =

19 Self-Selection of the Treated Units We observe that women who experience a childbearing and women who do not are very different in almost all their characteristics (Details are omitted) Systematic differences between the treatment group and the control group can also occur in the distribution of the missing covariate data 10.7% of the units in the sample presents at least a missing covariate value

20 Self-Selection of the Treated Units Missing-value indicators (proportion observed) Covariate Z = C Z = T Difference (%) Deprivation Index Education level of HH head Yrs of schooling of the HH head Education level Yrs of schooling Activity last week Age at first marriage Islam Parents in HH Years since the last live birth Pregnant Ever used contraceptives Use of contraceptives Total

21 Propensity Score Models for IFLS Data Standardized Differences (in %) and Percent Reduction in Bias for Propensity Scores, before and after matching using each approaches to the missing covariates problem in combination with Nearest Neighbor, Gaussian Kernel, and Stratification Propensity Score Matching Results after matching Nearest Neighbor Kernel Stratification Matching Matching Matching Missing Data Initial Stand. Red. Stand. Red. Stand. Red. Approaches Stand. Diff. Diff. in Bias Diff. in Bias Diff. in Bias (%) (%) (%) (%) (%) (%) (%) Complete-Data Rosenbaum-Rubin MI (without Y ) MI (with Y )

22 Treatment Effects Estimation Complete-Data Analysis Matching Method N T N C ATT S.E. t-value Nearest Neighbor Kernel Stratification The complete-cases analysis gives quite high average treatment effects and quite high standard errors It appears to be very sensitive to the choice of the matching method In our application, the MCAR assumption does not appear plausible; it is more reasonable to believe that the missing data mechanism is either Missing At Random (MAR) or nonignorable

23 Treatment Effects Estimation Rosenbaum-Rubin Model Matching Method N T N C ATT S.E. t-value Nearest Neighbor Kernel Stratification With respect to the complete-data analysis, the Rosenbaum-Rubin model appears to be more robust concerning the choice of the matching method It yields lower average treatment effects and lower standard errors It does not produce an excellent balance in the distribution of the estimated propensity score

24 Treatment Effects Estimation Multiple Imputation (without Y ) Matching Method N T N C ATT S.E. t-value Nearest Neighbor Kernel Stratification Multiple Imputation (with Y ) Matching Method N T N C ATT S.E. t-value Nearest Neighbor Kernel Stratification

25 Advantages of the MI Techniques The two imputation models outperform both of the other two approaches in terms of robustness of the estimates to the choice of the matching method Using different models for imputation and propensity score, the MI approach allows to incorporate model features in one model that might be inappropriate for another MI makes the choice of the propensity model easier The MI approach allows for final analysis of the outcomes (such as covariance adjustment) which include covariates which are not fully observed

26 Concluding Remarks We compared missing completely at random based estimates of propensity scores and the causal effect of interest with estimators based on alternative models for the missing data process: A pattern-mixture model based approach developed by Rosenbaum and Rubin (1984) A combination of propensity score matching with MI We judged the plausibility of these alternative approaches by the balance that the resulting propensity score models produced and the estimands they brought out In our application, the MI models appear to outperform both the complete data analysis and the Rosenbaum-Rubin method The combination of propensity score matching with MI we choose shows evidence that childbearing events reduce consumption levels

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