A Primer for Applying Propensity-Score Matching

Aug 2010
This document provides a guide to the key aspects of implementing Propensity-Score Matching (PSM) methodology. It summarizes the basic conditions under which PSM can be used to estimate the impact of a program and the data required, presenting examples of PSM applications. It explains how the Conditional Independence Assumption, combined with the Overlap Condition, reduces selection bias when participation in a program is determined by observable characteristics. It also describes different matching algorithms and some tests to assess the quality of the matching.