Near/Far Matching: A Study Design Approach to Instrumental Variables

Classic instrumental variable techniques involve the use of structural equation modeling or other forms of parameterized modeling. In this paper we use a nonparametric, matching-based instrumental variable methodology that is based on a study design approach. Similar to propensity score matching, though unlike classic instrumental variable approaches, near/far matching is capable of estimating causal effects when the outcome is not continuous. Unlike propensity score matching, though similar to instrumental variable techniques, near/far matching is also capable of estimating causal effects even when unmeasured covariates produce selection bias. We illustrate near/far matching by using Medicare data to compare the effectiveness of carotid arterial stents with cerebral protection versus carotid endarterectomy for the treatment of carotid stenosis.