1 Causal Effects of Foster Care: An Instrumental-Variables Approach

This paper describes the use of instrumental-variables (IV) to estimate causal effects of foster care on long- and short-term outcomes. This estimation strategy provides a tool to evaluate what are known as “natural experiments”: settings that mimic randomization usually associated with a controlled trial. The proposed natural experiment involves the effective randomization of investigators to child-protection cases. The results suggest that foster care placement increases like likelihood of delinquency and emergency healthcare episodes. Care must be taken when interpreting IV estimates. The results apply to cases that are part of the natural experiment— “marginal cases ” where the investigators may disagree about the placement recommendation