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The Stata Journal
Volume 11 Number 4: pp. 545-555

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Treatment interactions with nonexperimental data in Stata

Graham K. Brown
Centre for Development Studies
University of Bath
Bath, UK
Thanos Mergoupis
Department of Economics
University of Bath
Bath, UK
Abstract.  Treatment effects may vary with the observed characteristics of the treated, often with important implications. In the context of experimental data, a growing literature deals with the problem of specifying treatment interaction terms that most effectively capture this variation. Some results of this literature are now implemented in Stata. With nonexperimental (observational) data, and in particular when selection into treatment depends on unmeasured factors, treatment effects can be estimated using Stata’s treatreg command. Though not originally designed for this purpose, treatreg can be used to consistently estimate treatment interaction parameters. With interactions, however, adjustments are required to generate predicted values and estimate the average treatment effect. In this article, we introduce commands that perform this adjustment for multiplicative interactions, and we show the required adjustment for more complicated interactions.
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