[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:00.30,0:00:04.64,Default,,0000,0000,0000,,- [Instructor] The path from cause \Nto effect is dark and dangerous.
Dialogue: 0,0:00:05.04,0:00:08.02,Default,,0000,0000,0000,,But the weapons \Nof Econometrics are strong.
Dialogue: 0,0:00:08.48,0:00:11.73,Default,,0000,0000,0000,,Attack with fierce \Nand flexible instrumental variables
Dialogue: 0,0:00:11.73,0:00:15.80,Default,,0000,0000,0000,,when nature blesses you \Nwith fortuitous random assignment.
Dialogue: 0,0:00:19.39,0:00:21.09,Default,,0000,0000,0000,,[gong rings]
Dialogue: 0,0:00:23.65,0:00:28.70,Default,,0000,0000,0000,,Randomized trials are the surest \Npath to ceteris parabus comparisons.
Dialogue: 0,0:00:28.70,0:00:32.64,Default,,0000,0000,0000,,Alas, this powerful tool \Nis often unavailable.
Dialogue: 0,0:00:33.22,0:00:36.94,Default,,0000,0000,0000,,But sometimes, randomization \Nhappens by accident.
Dialogue: 0,0:00:36.94,0:00:40.59,Default,,0000,0000,0000,,That's when we turn \Nto instrumental variables --
Dialogue: 0,0:00:40.59,0:00:41.94,Default,,0000,0000,0000,,IV for short.
Dialogue: 0,0:00:41.94,0:00:44.51,Default,,0000,0000,0000,,- [Voice whispers] Instrumental \Nvariables.
Dialogue: 0,0:00:44.51,0:00:48.19,Default,,0000,0000,0000,,- [Instructor] Today's lesson \Nis the first of two on IV.
Dialogue: 0,0:00:48.96,0:00:52.95,Default,,0000,0000,0000,,Our first IV lesson begins \Nwith a story of schools.
Dialogue: 0,0:00:52.95,0:00:54.35,Default,,0000,0000,0000,,[school bell rings]
Dialogue: 0,0:00:54.35,0:00:56.14,Default,,0000,0000,0000,,- [Josh] Charter schools \Nare public schools
Dialogue: 0,0:00:56.14,0:01:00.11,Default,,0000,0000,0000,,freed from daily district oversight\Nand teacher union contracts.
Dialogue: 0,0:01:00.90,0:01:03.51,Default,,0000,0000,0000,,The question of whether charters \Nboost achievement
Dialogue: 0,0:01:03.51,0:01:05.16,Default,,0000,0000,0000,,is one of the most important
Dialogue: 0,0:01:05.16,0:01:07.76,Default,,0000,0000,0000,,in the history \Nof American education reform.
Dialogue: 0,0:01:08.14,0:01:12.56,Default,,0000,0000,0000,,- The most popular charter schools\Nhave more applicants than seats
Dialogue: 0,0:01:12.56,0:01:16.46,Default,,0000,0000,0000,,so the luck of a lottery draw \Ndecides who's offered a seat.
Dialogue: 0,0:01:16.87,0:01:20.50,Default,,0000,0000,0000,,A lot is at stake for the students \Nvying for their chance,
Dialogue: 0,0:01:20.50,0:01:25.00,Default,,0000,0000,0000,,and waiting for the lottery results \Nbrings up lots of emotions
Dialogue: 0,0:01:25.00,0:01:27.83,Default,,0000,0000,0000,,as was captured \Nin the award-winning documentary
Dialogue: 0,0:01:27.83,0:01:29.70,Default,,0000,0000,0000,,"Waiting For Superman."
Dialogue: 0,0:01:30.26,0:01:32.92,Default,,0000,0000,0000,,- [Mother] Don't cry. You're gonna \Nmake Mommy cry. Okay?
Dialogue: 0,0:01:37.50,0:01:40.62,Default,,0000,0000,0000,,- Do charters really provide\Na better education?
Dialogue: 0,0:01:40.95,0:01:43.18,Default,,0000,0000,0000,,Critics most definitely say no,
Dialogue: 0,0:01:43.41,0:01:46.48,Default,,0000,0000,0000,,arguing that charters enroll \Nbetter students to begin with,
Dialogue: 0,0:01:46.48,0:01:50.16,Default,,0000,0000,0000,,smarter or more motivated,\Nso differences in later outcomes
Dialogue: 0,0:01:50.16,0:01:52.06,Default,,0000,0000,0000,,reflects selection bias.
Dialogue: 0,0:01:52.60,0:01:54.73,Default,,0000,0000,0000,,- [Kamal] Wait, this one seems easy.
Dialogue: 0,0:01:55.14,0:01:57.44,Default,,0000,0000,0000,,In a lottery, winners \Nare chosen randomly,
Dialogue: 0,0:01:57.50,0:02:00.08,Default,,0000,0000,0000,,so just compare winners and losers.\N- [Student] Obviously.
Dialogue: 0,0:02:00.08,0:02:01.70,Default,,0000,0000,0000,,- On the right track, Kamal,
Dialogue: 0,0:02:01.70,0:02:04.75,Default,,0000,0000,0000,,but charter lotteries \Ndon't force kids into
Dialogue: 0,0:02:04.75,0:02:07.56,Default,,0000,0000,0000,,or out of a particular school.
Dialogue: 0,0:02:07.75,0:02:10.67,Default,,0000,0000,0000,,They randomize offers \Nof a charter seat.
Dialogue: 0,0:02:11.65,0:02:13.45,Default,,0000,0000,0000,,Some kids get lucky.
Dialogue: 0,0:02:13.45,0:02:14.97,Default,,0000,0000,0000,,Some kids don't.
Dialogue: 0,0:02:14.97,0:02:19.12,Default,,0000,0000,0000,,If we just wanted to know \Nthe effect of charter school offers,
Dialogue: 0,0:02:19.12,0:02:22.42,Default,,0000,0000,0000,,we could treat this \Nas a randomized trial.
Dialogue: 0,0:02:22.72,0:02:24.68,Default,,0000,0000,0000,,But we we're interested \Nin the effects
Dialogue: 0,0:02:24.68,0:02:28.28,Default,,0000,0000,0000,,of charter school attendance,\Nnot offers.
Dialogue: 0,0:02:28.57,0:02:31.92,Default,,0000,0000,0000,,And not everyone \Nwho is offered, accepts.
Dialogue: 0,0:02:31.92,0:02:37.23,Default,,0000,0000,0000,,IV turns the effect of being offered\Na charter seat into the effect
Dialogue: 0,0:02:37.23,0:02:40.37,Default,,0000,0000,0000,,of actually attending \Na charter school.
Dialogue: 0,0:02:40.37,0:02:42.34,Default,,0000,0000,0000,,- [Student] Cool.\N- Oh nice.
Dialogue: 0,0:02:45.92,0:02:48.87,Default,,0000,0000,0000,,- Let's look at an example, \Na charter school from
Dialogue: 0,0:02:48.87,0:02:52.35,Default,,0000,0000,0000,,the Knowledge Is Power \NProgram, or KIPP for short.
Dialogue: 0,0:02:52.74,0:02:54.94,Default,,0000,0000,0000,,This KIPP school is in Lynn,
Dialogue: 0,0:02:54.94,0:02:58.84,Default,,0000,0000,0000,,a faded industrial town \Non the coast of Massachusetts.
Dialogue: 0,0:02:59.10,0:03:01.89,Default,,0000,0000,0000,,The school has \Nmore applicants than seats
Dialogue: 0,0:03:01.89,0:03:05.62,Default,,0000,0000,0000,,and therefore picks its students\Nusing a lottery.
Dialogue: 0,0:03:05.83,0:03:11.85,Default,,0000,0000,0000,,From 2005 to 2008,\N371 fourth and fifth graders
Dialogue: 0,0:03:11.85,0:03:15.32,Default,,0000,0000,0000,,put their names \Nin the KIPP Lynn lottery,
Dialogue: 0,0:03:15.38,0:03:18.75,Default,,0000,0000,0000,,253 students won a seat at KIPP,
Dialogue: 0,0:03:18.75,0:03:21.65,Default,,0000,0000,0000,,118 students lost.
Dialogue: 0,0:03:21.97,0:03:26.00,Default,,0000,0000,0000,,A year later, lottery winners had \Nmuch higher math scores
Dialogue: 0,0:03:26.00,0:03:27.72,Default,,0000,0000,0000,,than lottery losers.
Dialogue: 0,0:03:27.80,0:03:30.37,Default,,0000,0000,0000,,But remember, \Nwe're not trying to figure out
Dialogue: 0,0:03:30.37,0:03:33.80,Default,,0000,0000,0000,,whether winning a lottery \Nmakes you better at math.
Dialogue: 0,0:03:34.07,0:03:38.47,Default,,0000,0000,0000,,We want to know if attending KIPP\Nmakes you better at math.
Dialogue: 0,0:03:38.79,0:03:45.67,Default,,0000,0000,0000,,Of the 253 lottery winners,\Nonly 199 actually went to KIPP.
Dialogue: 0,0:03:46.14,0:03:48.80,Default,,0000,0000,0000,,The others chose \Na traditional public school.
Dialogue: 0,0:03:49.56,0:03:55.37,Default,,0000,0000,0000,,Similarly of the 118 lottery losers,\Na few actually ended up at KIPP.
Dialogue: 0,0:03:55.51,0:03:57.45,Default,,0000,0000,0000,,They got an offer later.
Dialogue: 0,0:03:57.45,0:04:02.38,Default,,0000,0000,0000,,So what was the effect on test scores\Nof actually attending KIPP?
Dialogue: 0,0:04:03.11,0:04:05.43,Default,,0000,0000,0000,,- [Kamal] Why can't we just \Nmeasure their math scores?
Dialogue: 0,0:04:05.43,0:04:07.10,Default,,0000,0000,0000,,- [Instructor] Great question.
Dialogue: 0,0:04:07.10,0:04:09.30,Default,,0000,0000,0000,,Who would you compare them to?
Dialogue: 0,0:04:09.30,0:04:11.11,Default,,0000,0000,0000,,- [Kamal] Those who didn't attend.
Dialogue: 0,0:04:11.11,0:04:12.94,Default,,0000,0000,0000,,- [Instructor] Is attendance random?
Dialogue: 0,0:04:13.94,0:04:15.06,Default,,0000,0000,0000,,- [Camilla] No.
Dialogue: 0,0:04:15.06,0:04:16.18,Default,,0000,0000,0000,,- Selection bias.
Dialogue: 0,0:04:16.18,0:04:17.91,Default,,0000,0000,0000,,- [Instructor] Correct.\N- [Otto] What?
Dialogue: 0,0:04:17.91,0:04:21.83,Default,,0000,0000,0000,,- [Instructor] The KIPP offers \Nare random so we can be confident
Dialogue: 0,0:04:21.83,0:04:26.41,Default,,0000,0000,0000,,of ceteris parabus,\Nbut attendance is not random.
Dialogue: 0,0:04:26.64,0:04:30.60,Default,,0000,0000,0000,,The choice to accept the offer \Nmight be due to characteristics
Dialogue: 0,0:04:30.60,0:04:32.98,Default,,0000,0000,0000,,that are related \Nto math performance --
Dialogue: 0,0:04:33.25,0:04:36.16,Default,,0000,0000,0000,,say, for example, \Nthat dedicated parents
Dialogue: 0,0:04:36.16,0:04:38.94,Default,,0000,0000,0000,,are more likely \Nto accept the offer.
Dialogue: 0,0:04:38.94,0:04:42.65,Default,,0000,0000,0000,,Their kids are also more likely \Nto do better in math,
Dialogue: 0,0:04:42.65,0:04:44.09,Default,,0000,0000,0000,,regardless of school.
Dialogue: 0,0:04:44.09,0:04:45.11,Default,,0000,0000,0000,,- [Student] Right.
Dialogue: 0,0:04:45.11,0:04:47.61,Default,,0000,0000,0000,,- [Instructor] IV converts \Nthe offer effect
Dialogue: 0,0:04:47.61,0:04:50.57,Default,,0000,0000,0000,,into the effect of KIPP attendance,
Dialogue: 0,0:04:50.57,0:04:53.37,Default,,0000,0000,0000,,adjusting for the fact \Nthat some winners go elsewhere
Dialogue: 0,0:04:53.37,0:04:56.57,Default,,0000,0000,0000,,and some losers manage \Nto attend KIPP anyway.
Dialogue: 0,0:04:56.95,0:05:00.52,Default,,0000,0000,0000,,Essentially, IV takes \Nan incomplete randomization
Dialogue: 0,0:05:00.52,0:05:03.01,Default,,0000,0000,0000,,and makes the appropriate \Nadjustments.
Dialogue: 0,0:05:03.68,0:05:07.11,Default,,0000,0000,0000,,How? IV describes a chain reaction.
Dialogue: 0,0:05:07.43,0:05:10.34,Default,,0000,0000,0000,,Why do offers affect achievement?
Dialogue: 0,0:05:10.34,0:05:13.18,Default,,0000,0000,0000,,Probably because they affect \Ncharter attendance
Dialogue: 0,0:05:13.18,0:05:16.64,Default,,0000,0000,0000,,and charter attendance \Nimproves math scores,
Dialogue: 0,0:05:16.64,0:05:20.44,Default,,0000,0000,0000,,the first link in the chain\Ncalled the first stage
Dialogue: 0,0:05:20.44,0:05:24.34,Default,,0000,0000,0000,,is the effect of the lottery \Non charter attendance.
Dialogue: 0,0:05:24.45,0:05:28.36,Default,,0000,0000,0000,,The second stage is the length \Nbetween attending a charter
Dialogue: 0,0:05:28.36,0:05:30.15,Default,,0000,0000,0000,,and an outcome variable,
Dialogue: 0,0:05:30.15,0:05:32.26,Default,,0000,0000,0000,,in this case, math scores.
Dialogue: 0,0:05:32.94,0:05:36.44,Default,,0000,0000,0000,,The instrumental variable, \Nor instrument for short,
Dialogue: 0,0:05:36.44,0:05:40.25,Default,,0000,0000,0000,,is the variable \Nthat initiates the chain reaction.
Dialogue: 0,0:05:40.90,0:05:44.83,Default,,0000,0000,0000,,The effect of the instrument \Non the outcome is called
Dialogue: 0,0:05:44.83,0:05:46.63,Default,,0000,0000,0000,,the reduced form.
Dialogue: 0,0:05:48.14,0:05:51.62,Default,,0000,0000,0000,,This chain reaction can be \Nrepresented mathematically.
Dialogue: 0,0:05:51.62,0:05:55.27,Default,,0000,0000,0000,,We multiply the first stage,\Nthe effect of winning
Dialogue: 0,0:05:55.27,0:05:57.87,Default,,0000,0000,0000,,on attendance, by the second stage,
Dialogue: 0,0:05:57.87,0:06:00.57,Default,,0000,0000,0000,,the effect of attendance on scores.
Dialogue: 0,0:06:00.63,0:06:02.71,Default,,0000,0000,0000,,And we get the reduced form,
Dialogue: 0,0:06:02.71,0:06:05.68,Default,,0000,0000,0000,,the effect of winning \Nthe lottery on scores.
Dialogue: 0,0:06:06.78,0:06:11.57,Default,,0000,0000,0000,,The reduced form and first stage \Nare observable and easy to compute.
Dialogue: 0,0:06:11.75,0:06:14.88,Default,,0000,0000,0000,,However, the effect of attendance\Non achievement
Dialogue: 0,0:06:14.88,0:06:16.99,Default,,0000,0000,0000,,is not directly observed.
Dialogue: 0,0:06:16.99,0:06:20.36,Default,,0000,0000,0000,,This is the causal effect\Nwe're trying to determine.
Dialogue: 0,0:06:21.04,0:06:23.83,Default,,0000,0000,0000,,Given some important assumptions \Nwe'll discuss shortly,
Dialogue: 0,0:06:23.83,0:06:25.98,Default,,0000,0000,0000,,we can find the effect \Nof KIPP attendance
Dialogue: 0,0:06:25.98,0:06:29.18,Default,,0000,0000,0000,,by dividing the reduced form\Nby the first stage.
Dialogue: 0,0:06:29.22,0:06:32.77,Default,,0000,0000,0000,,This will become more clear \Nas we work through an example.
Dialogue: 0,0:06:32.77,0:06:34.21,Default,,0000,0000,0000,,- [Student] Let's do this.
Dialogue: 0,0:06:37.16,0:06:38.73,Default,,0000,0000,0000,,- A quick note on measurement.
Dialogue: 0,0:06:38.73,0:06:41.68,Default,,0000,0000,0000,,We measure achievement\Nusing standard deviations,
Dialogue: 0,0:06:41.68,0:06:44.73,Default,,0000,0000,0000,,often denoted \Nby the Greek letter sigma (σ).
Dialogue: 0,0:06:44.73,0:06:48.86,Default,,0000,0000,0000,,One σ is a huge move\Nfrom around the bottom 15%
Dialogue: 0,0:06:48.86,0:06:51.63,Default,,0000,0000,0000,,to the middle of most\Nachievement distributions.
Dialogue: 0,0:06:51.63,0:06:55.41,Default,,0000,0000,0000,,Even a ¼ or ½ σ difference is big.
Dialogue: 0,0:06:56.26,0:06:58.39,Default,,0000,0000,0000,,- [Instructor] Now we're ready \Nto plug some numbers
Dialogue: 0,0:06:58.39,0:07:01.38,Default,,0000,0000,0000,,into the equation \Nwe introduced earlier.
Dialogue: 0,0:07:01.56,0:07:03.23,Default,,0000,0000,0000,,First up, what's the effect
Dialogue: 0,0:07:03.23,0:07:06.08,Default,,0000,0000,0000,,of winning the lottery \Non math scores?
Dialogue: 0,0:07:06.35,0:07:10.44,Default,,0000,0000,0000,,KIPP applicants' math scores \Nare a third of a standard deviation
Dialogue: 0,0:07:10.50,0:07:14.39,Default,,0000,0000,0000,,below the state average in \Nthe year before they apply to KIPP.
Dialogue: 0,0:07:14.39,0:07:18.12,Default,,0000,0000,0000,,But a year later, lottery winners\Nscore right at the state average
Dialogue: 0,0:07:18.22,0:07:21.48,Default,,0000,0000,0000,,while the lottery losers \Nare still well behind
Dialogue: 0,0:07:21.48,0:07:25.50,Default,,0000,0000,0000,,with an average score \Naround - 0.36 σ.
Dialogue: 0,0:07:25.83,0:07:29.62,Default,,0000,0000,0000,,The effect of winning the lottery \Non scores is the difference
Dialogue: 0,0:07:29.62,0:07:32.82,Default,,0000,0000,0000,,between the winners' scores\Nand the losers' scores.
Dialogue: 0,0:07:33.40,0:07:35.78,Default,,0000,0000,0000,,Take the winners' \Naverage math scores,
Dialogue: 0,0:07:35.78,0:07:38.27,Default,,0000,0000,0000,,subtract the losers' \Naverage math scores,
Dialogue: 0,0:07:38.27,0:07:41.50,Default,,0000,0000,0000,,and you will have 0.36 σ .
Dialogue: 0,0:07:41.91,0:07:46.66,Default,,0000,0000,0000,,Next up: what's the effect \Nof winning the lottery on attendance?
Dialogue: 0,0:07:46.81,0:07:49.19,Default,,0000,0000,0000,,In other words, \Nif you win the lottery,
Dialogue: 0,0:07:49.19,0:07:53.29,Default,,0000,0000,0000,,how much more likely are you \Nto attend KIPP than if you lose?
Dialogue: 0,0:07:53.64,0:07:57.61,Default,,0000,0000,0000,,First, what percentage \Nof lottery winners attend KIPP?
Dialogue: 0,0:07:57.61,0:08:00.63,Default,,0000,0000,0000,,Divide the number of winners\Nwho attended KIPP
Dialogue: 0,0:08:00.63,0:08:05.36,Default,,0000,0000,0000,,by the total number \Nof lottery winners -- that's 78%.
Dialogue: 0,0:08:05.81,0:08:09.14,Default,,0000,0000,0000,,To find the percentage \Nof lottery losers who attended KIPP,
Dialogue: 0,0:08:09.14,0:08:12.29,Default,,0000,0000,0000,,we divide the number of losers \Nwho attended KIPP
Dialogue: 0,0:08:12.29,0:08:16.76,Default,,0000,0000,0000,,by the total number \Nof lottery losers -- that's 4%.
Dialogue: 0,0:08:17.38,0:08:21.39,Default,,0000,0000,0000,,Subtract 4 from 78, and we find \Nthat winning the lottery
Dialogue: 0,0:08:21.39,0:08:25.51,Default,,0000,0000,0000,,makes you 74% \Nmore likely to attend KIPP.
Dialogue: 0,0:08:25.95,0:08:28.23,Default,,0000,0000,0000,,Now we can find \Nwhat we're really after,
Dialogue: 0,0:08:28.38,0:08:34.55,Default,,0000,0000,0000,,the effect of attendance on scores,\Nby dividing 0.36 by 0.74.
Dialogue: 0,0:08:34.79,0:08:37.58,Default,,0000,0000,0000,,Attending KIPP raises math scores
Dialogue: 0,0:08:37.58,0:08:41.52,Default,,0000,0000,0000,,by 0.48 standard deviations \Non average.
Dialogue: 0,0:08:42.27,0:08:44.50,Default,,0000,0000,0000,,That's an awesome achievement gain,
Dialogue: 0,0:08:44.50,0:08:47.24,Default,,0000,0000,0000,,equal to moving \Nfrom about the bottom third
Dialogue: 0,0:08:47.24,0:08:49.96,Default,,0000,0000,0000,,to the middle \Nof the achievement distribution.
Dialogue: 0,0:08:49.96,0:08:51.24,Default,,0000,0000,0000,,- [Student] Whoa, half a sig.
Dialogue: 0,0:08:51.24,0:08:53.51,Default,,0000,0000,0000,,- [Instructor] These estimates \Nare for kids opting in
Dialogue: 0,0:08:53.51,0:08:56.05,Default,,0000,0000,0000,,to the KIPP lottery,\Nwhose enrollment status
Dialogue: 0,0:08:56.05,0:08:57.76,Default,,0000,0000,0000,,is changed by winning.
Dialogue: 0,0:08:57.98,0:09:00.62,Default,,0000,0000,0000,,That's not necessarily \Na random sample
Dialogue: 0,0:09:00.62,0:09:02.28,Default,,0000,0000,0000,,of all children in Lynn.
Dialogue: 0,0:09:02.54,0:09:05.04,Default,,0000,0000,0000,,So we can't assume \Nwe'd see the same effect
Dialogue: 0,0:09:05.04,0:09:07.33,Default,,0000,0000,0000,,for other types of students.\N- [Student] Huh.
Dialogue: 0,0:09:07.33,0:09:10.22,Default,,0000,0000,0000,,- But this effect \Non keen for KIPP kids
Dialogue: 0,0:09:10.22,0:09:13.37,Default,,0000,0000,0000,,is likely to be a good indicator\Nof the consequences
Dialogue: 0,0:09:13.37,0:09:15.77,Default,,0000,0000,0000,,of adding additional charter seats.
Dialogue: 0,0:09:15.77,0:09:17.22,Default,,0000,0000,0000,,- [Student] Cool.\N- [Student] Got it.
Dialogue: 0,0:09:19.63,0:09:23.14,Default,,0000,0000,0000,,- IV eliminates selection bias, \Nbut like all of our tools,
Dialogue: 0,0:09:23.14,0:09:25.62,Default,,0000,0000,0000,,the solution builds on a set \Nof assumptions
Dialogue: 0,0:09:25.62,0:09:27.54,Default,,0000,0000,0000,,not to be taken for granted.
Dialogue: 0,0:09:28.10,0:09:31.35,Default,,0000,0000,0000,,First, there must be \Na substantial first stage --
Dialogue: 0,0:09:31.35,0:09:35.46,Default,,0000,0000,0000,,that is the instrumental variable,\Nwinning or losing the lottery,
Dialogue: 0,0:09:35.46,0:09:38.92,Default,,0000,0000,0000,,must really change the variable\Nwhose effect we're interested in --
Dialogue: 0,0:09:38.92,0:09:41.03,Default,,0000,0000,0000,,here, KIPP attendance.
Dialogue: 0,0:09:41.30,0:09:44.42,Default,,0000,0000,0000,,In this case, the first stage \Nis not really in doubt.
Dialogue: 0,0:09:44.42,0:09:47.89,Default,,0000,0000,0000,,Winning the lottery makes \NKIPP attendance much more likely.
Dialogue: 0,0:09:48.39,0:09:50.63,Default,,0000,0000,0000,,Not all IV stories are like that.
Dialogue: 0,0:09:51.32,0:09:53.70,Default,,0000,0000,0000,,Second, the instrument \Nmust be as good
Dialogue: 0,0:09:53.70,0:09:56.73,Default,,0000,0000,0000,,as randomly assigned, \Nmeaning lottery winners and losers
Dialogue: 0,0:09:56.73,0:09:58.72,Default,,0000,0000,0000,,have similar characteristics.
Dialogue: 0,0:09:58.89,0:10:01.56,Default,,0000,0000,0000,,This is the independence assumption.
Dialogue: 0,0:10:01.98,0:10:05.63,Default,,0000,0000,0000,,Of course, KIPP lottery wins\Nreally are randomly assigned.
Dialogue: 0,0:10:05.63,0:10:09.29,Default,,0000,0000,0000,,Still, we should check for balance \Nand confirm that winners and losers
Dialogue: 0,0:10:09.29,0:10:11.49,Default,,0000,0000,0000,,have similar family backgrounds,
Dialogue: 0,0:10:11.49,0:10:13.39,Default,,0000,0000,0000,,similar aptitudes and so on.
Dialogue: 0,0:10:13.54,0:10:16.97,Default,,0000,0000,0000,,In essence, we're checking \Nto ensure KIPP lotteries are fair
Dialogue: 0,0:10:16.97,0:10:20.02,Default,,0000,0000,0000,,with no group of applicants \Nsuspiciously likely to win.
Dialogue: 0,0:10:21.37,0:10:24.37,Default,,0000,0000,0000,,Finally, we require \Nthe instrument change outcomes
Dialogue: 0,0:10:24.37,0:10:26.25,Default,,0000,0000,0000,,solely through \Nthe variable of interest,
Dialogue: 0,0:10:26.25,0:10:28.10,Default,,0000,0000,0000,,in this case, attending KIPP.
Dialogue: 0,0:10:28.30,0:10:31.37,Default,,0000,0000,0000,,This assumption is called\Nthe exclusion restriction.
Dialogue: 0,0:10:32.95,0:10:37.50,Default,,0000,0000,0000,,- IV only works if you can satisfy \Nthese three assumptions.
Dialogue: 0,0:10:37.78,0:10:40.42,Default,,0000,0000,0000,,- I don't understand \Nthe exclusion restriction.
Dialogue: 0,0:10:40.92,0:10:43.60,Default,,0000,0000,0000,,How could winning the lottery\Naffect math scores
Dialogue: 0,0:10:43.60,0:10:45.24,Default,,0000,0000,0000,,other than by attending KIPP?
Dialogue: 0,0:10:45.24,0:10:47.23,Default,,0000,0000,0000,,- [Student] Yeah. \N- [Instructor] Great question.
Dialogue: 0,0:10:47.23,0:10:50.54,Default,,0000,0000,0000,,Suppose lottery winners\Nare just thrilled to win,
Dialogue: 0,0:10:50.54,0:10:55.04,Default,,0000,0000,0000,,and this happiness motivates them \Nto study more and learn more math,
Dialogue: 0,0:10:55.04,0:10:57.14,Default,,0000,0000,0000,,regardless of where \Nthey go to school.
Dialogue: 0,0:10:57.23,0:10:59.90,Default,,0000,0000,0000,,This would violate \Nthe exclusion restriction
Dialogue: 0,0:10:59.90,0:11:03.79,Default,,0000,0000,0000,,because the motivational effect \Nof winning is a second channel
Dialogue: 0,0:11:03.79,0:11:06.57,Default,,0000,0000,0000,,whereby lotteries \Nmight affect test scores.
Dialogue: 0,0:11:06.86,0:11:09.55,Default,,0000,0000,0000,,While it's hard \Nto rule this out entirely,
Dialogue: 0,0:11:09.55,0:11:12.65,Default,,0000,0000,0000,,there's no evidence \Nof any alternative channels
Dialogue: 0,0:11:12.65,0:11:14.50,Default,,0000,0000,0000,,in the KIPP study.
Dialogue: 0,0:11:17.82,0:11:20.70,Default,,0000,0000,0000,,- IV solves the problem \Nof selection bias
Dialogue: 0,0:11:20.70,0:11:24.85,Default,,0000,0000,0000,,in scenarios like the KIPP lottery\Nwhere treatment offers are random
Dialogue: 0,0:11:24.85,0:11:27.08,Default,,0000,0000,0000,,but some of those offered opt out.
Dialogue: 0,0:11:28.45,0:11:31.70,Default,,0000,0000,0000,,This sort of intentional \Nyet incomplete random assignment
Dialogue: 0,0:11:31.70,0:11:33.37,Default,,0000,0000,0000,,is surprisingly common.
Dialogue: 0,0:11:33.37,0:11:36.32,Default,,0000,0000,0000,,Even randomized clinical trials\Nhave this feature.
Dialogue: 0,0:11:37.13,0:11:40.05,Default,,0000,0000,0000,,IV solves the problem \Nof non-random take up
Dialogue: 0,0:11:40.05,0:11:42.53,Default,,0000,0000,0000,,in lotteries or clinical research.
Dialogue: 0,0:11:43.05,0:11:46.72,Default,,0000,0000,0000,,But lotteries are not the only\Nsource of compelling instruments.
Dialogue: 0,0:11:46.92,0:11:50.40,Default,,0000,0000,0000,,Many causal questions can be\Naddressed by naturally occurring
Dialogue: 0,0:11:50.40,0:11:53.83,Default,,0000,0000,0000,,as good as randomly \Nassigned variation.
Dialogue: 0,0:11:54.73,0:11:56.92,Default,,0000,0000,0000,,Here's a causal question for you --
Dialogue: 0,0:11:56.92,0:11:59.96,Default,,0000,0000,0000,,do women who have children early \Nin their careers suffer
Dialogue: 0,0:11:59.96,0:12:02.65,Default,,0000,0000,0000,,a substantial earnings penalty \Nas a result?
Dialogue: 0,0:12:02.65,0:12:04.97,Default,,0000,0000,0000,,After all, women earn less than men.
Dialogue: 0,0:12:05.57,0:12:08.51,Default,,0000,0000,0000,,We could, of course, simply \Ncompare the earnings of women
Dialogue: 0,0:12:08.51,0:12:10.89,Default,,0000,0000,0000,,with more and fewer children.
Dialogue: 0,0:12:10.89,0:12:14.19,Default,,0000,0000,0000,,But such comparisons are fraught\Nwith selection bias.
Dialogue: 0,0:12:14.81,0:12:19.09,Default,,0000,0000,0000,,If only we could randomly assign \Nbabies to different households.
Dialogue: 0,0:12:19.09,0:12:22.13,Default,,0000,0000,0000,,Yeah, right, \Nsounds pretty fanciful.
Dialogue: 0,0:12:22.47,0:12:26.60,Default,,0000,0000,0000,,Our next IV story -- fantastic\Nand not fanciful --
Dialogue: 0,0:12:26.60,0:12:30.23,Default,,0000,0000,0000,,illustrates an amazing, \Nnaturally-occurring instrument
Dialogue: 0,0:12:30.23,0:12:31.92,Default,,0000,0000,0000,,for family size.
Dialogue: 0,0:12:33.32,0:12:34.32,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:12:34.55,0:12:37.98,Default,,0000,0000,0000,,- [Instructor] You're on your way \Nto mastering Econometrics.
Dialogue: 0,0:12:38.15,0:12:40.17,Default,,0000,0000,0000,,Make sure this video sticks
Dialogue: 0,0:12:40.17,0:12:42.64,Default,,0000,0000,0000,,by taking a few \Nquick practice questions.
Dialogue: 0,0:12:42.89,0:12:46.34,Default,,0000,0000,0000,,Or, if you're ready, \Nclick for the next video.
Dialogue: 0,0:12:46.53,0:12:50.28,Default,,0000,0000,0000,,You can also check out \NMRU's website for more courses,
Dialogue: 0,0:12:50.28,0:12:52.03,Default,,0000,0000,0000,,teacher resources, and more.
Dialogue: 0,0:12:52.29,0:12:53.77,Default,,0000,0000,0000,,♪ [music] ♪