From Local to Global: External Validity in a Fertility Natural Experiment

TL;DR

This paper investigates the external validity of a fertility natural experiment across diverse global contexts, analyzing macro and micro factors affecting treatment effect predictions and proposing methods for policy decision-making.

Contribution

It introduces a comprehensive analysis of external validity using extensive replications and develops methods to guide experiment placement and policy decisions.

Findings

Macro covariates are more influential than micro covariates in predicting treatment effects.

The study provides new insights into sources of error in external validity predictions.

Methods are proposed for optimal experiment location and policy decision strategies.

Abstract

We study issues related to external validity for treatment effects using over 100 replications of the Angrist and Evans (1998) natural experiment on the effects of sibling sex composition on fertility and labor supply. The replications are based on census data from around the world going back to 1960. We decompose sources of error in predicting treatment effects in external contexts in terms of macro and micro sources of variation. In our empirical setting, we find that macro covariates dominate over micro covariates for reducing errors in predicting treatments, an issue that past studies of external validity have been unable to evaluate. We develop methods for two applications to evidence-based decision-making, including determining where to locate an experiment and whether policy-makers should commission new experiments or rely on an existing evidence base for making a policy decision.