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Treatment variable should be binary (0/1)

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Variable Selection

Difference in Means

Simple comparison of average outcomes between treated and control groups. Best for randomized experiments.

Regression Adjustment (OLS)

Linear regression controlling for covariates. Assumes additive, linear confounding effects.

Inverse Probability Weighting

Reweights observations by propensity scores to balance treatment groups. Requires covariates.

Analysis Complete
Average Treatment Effect

Interpretation

Key Identifying Assumptions

  • Unconfoundedness: All variables affecting both treatment and outcome are observed
  • SUTVA: No interference between units; stable treatment values
  • Positivity: Every unit has positive probability of receiving treatment