Near identification of policy trade-offs using preference proxies to elicit hidden information in the linear case

Abstract

This paper shows that neither OLS nor 2SLS can generically identify policy trade offs in the linear case, except under extreme assumptions. Practitioners have to be content with near identification and the paper discusses how to choose between these two methods. It shows that a two-stage approach using preference proxies to elicit hidden information can potentially narrow the identification gap and that a simple specification test can be used to assess whether these proxies really contribute to improving identification.

Keywords

Replaced by

Jean-Paul Azam, “Near Identification of Policy Trade-Offs Using Preference Proxies to Elicit Hidden Information in the Linear Case”, Economics, Law and Policy, vol. 4, n. 1, June 2021.

Reference

Jean-Paul Azam, “Near identification of policy trade-offs using preference proxies to elicit hidden information in the linear case”, TSE Working Paper, n. 16-642, April 2016.