Evaluation of the Australian Wage Subsidy Special Youth ...

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indicated that even significant attrition which is observed to be selective in nature does
not introduce strong biases in estimation results. Falaris and Peters (1998) p 531 noted
that effects of attrition on regression estimates in general is negligible, or only affects the
intercept. The overarching message from these studies is that attrition bias, even when
found to act selectively on observable characteristics, does not necessarily bias the
estimates of interest in modelling.
Other evidence also points to the importance of validating the extent of attrition bias
effects on the estimates of interest. Alderman et al. (2000) apply the methods set out in
Fitzgerald et al. (1998a), and find some outcomes are affected by attrition bias while
others are not. They find that univariate comparisons showing systematic attrition
affecting particular variables of interest do not translate to these variables being
significant in a probit model predicting attrition. They warn that in the relations they
modelled attrition bias led to striking differences affecting the coefficients for some
models of outcomes but not others. They further point out that their results indicate that
attrition bias conclusions are not generalisable to all multivariate estimates or all data, but
that the particular model, outcome of interest and data need to be assessed.
5.4 Empirical attrition test and treatment
Fitzgerald et al. (1998b) examined the Michigan Panel Study on Income Dynamics (PSID)
of the US, and found attrition was highly selective, concentrated amongst those of lower
socioeconomic status. Usefully, they outlined the statistical framework for tests for
attrition bias within an econometric context. In their model, a key distinction is drawn
between attrition where selection is on observables as opposed to selection upon
unobservables. The background for their approach is the selection bias modelling
econometric literature, deriving chiefly from Heckman (1979). The earlier attrition study
of the PSID by Becketti et al. (1988) is shown to be a close relative of the direct
modelling of attrition proposed by Fitzgerald et al. (1998a). Their model is defined as
follows:
(9) Y = β 0 + β 1 X + ε