Falsification Tests for Instrumental Variable Designs With an Application to Tendency to Operate

Area of Science:

• Health Services Research
• Econometrics
• Causal Inference

Background:

• Instrumental variable (IV) methods are vital for estimating causal effects in health services research.
• Unobserved confounding can bias estimates, necessitating robust methods like IV.
• Key IV assumptions include independence from unmeasured confounders and exclusion restriction, which are untestable directly.

Purpose of the Study:

• To provide an overview of falsification tests for instrumental variable designs.
• To highlight a specific falsification test using subpopulations with extreme treatment proportions.
• To demonstrate the application and utility of falsification tests in health services research.

Main Methods:

• Overview of falsification tests for IV assumptions.
• Application of a falsification test in a subpopulation where treatment is nearly universal or absent.
• Assessment of the intention-to-treat effect within these subpopulations as a falsification diagnostic.

Main Results:

• The proposed falsification test can provide decisive evidence against IV assumptions when they fail.
• Demonstrated the use of falsification tests with the 'tendency to operate' instrumental variable in health services research.
• In the specific application, the falsification test yielded no evidence against the validity of the IV assumptions.

Conclusions:

• Falsification tests are valuable tools for assessing the plausibility of instrumental variable assumptions.
• While not proving assumptions, falsification tests can strongly refute them.
• The application in health services research suggests the 'tendency to operate' IV may be valid, supported by falsification evidence.