Solved – Inverse probability of treatment weighted (IPTW) estimator for a binary outcome

binary datacausalityobservational-study

Recently, there are several estimators have been proposed to estimate the average treatment effect (ATE) in observation studies, such as IPTW, doubly-robust estimator, etc. It fully makes senses to me for using these estimators to estimate ATE when outcome variable is continuous. However, it does not make any sense to me at all to use these estimators for a binary outcome. There are many researchers have published their papers in statistical journals such as "statistics in medicine" to demonstrate how to use these estimators to estimate ATE (risk difference, OR, RR) when outcome variable is "dichotomous /binary" variable. The IPTW estimator is

$\hat{\Delta} = \frac{1}{N}\{\sum_{i=1}^{N}\frac{Z_iY_i}{\hat{e}_i} – \sum_{i=1}^{N}\frac{(1-Z_i)Y_i}{1-\hat{e}_i}\}$,

where $N$ is sample size, $\hat{e}_i$ is an estimated weight, $Z_i$ is the treatment assignment (control/trt or 0/1) for $i^{th}$ subject and $Y_i$ is the outcome (0/1 or No/Yes) of $i^{th}$ subject.

My question is that $Z_i$ and $Y_i$ are categorical variables and $\hat{e}_i$ is a continuous variable, which is between 0 and 1. How can categorical variables be divided by a continuous variable?

Best Answer

You seem to be slightly misunderstanding the purpose of the weights in IPTW. You are right it would not make sense to have a fractional value for a binary outcome, but the goal of weighting here is not to get a "corrected" outcome value for each individual.

Instead, you are creating a pseudo-population the composition of which is the individuals in the original population weighted by the inverse of their probability of treatment, given some covariates. In the pseudo-population, there is no longer any association between those covariates and treatment (and therefore no confounding). The goal of weighting, therefore, is to get a contribution to the average outcome value that each individual makes. You can now have fractional values, because these are fractional contributions, not fractional outcome values.

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