Assumptions of Value‐Added Models for Estimating School Effects

Abstract

The ability of school (or teacher) value‐added models to provide unbiased estimates of school (or teacher) effects rests on a set of assumptions. In this paper, we identify six assumptions that are required in order that the estimands of such models are well‐defined and that the models are able to recover the desired parameters from observable data. These assumptions are 1) manipulability; 2) no interference between units; 3) interval scale metric; 4) homogeneity of effects; 5) strongly ignorable assignment; and 6) functional form. We discuss the plausibility of these assumptions and the consequences of their violation. In particular, because the consequences of violations of the last three assumptions have not been assessed in prior literature, we conduct a set of simulation analyses to investigate the extent to which plausible violations of them alter inferences from value‐added models. We find that modest violations of these assumptions degrade the quality of value‐added estimates, but that models that explicitly account for heterogeneity of school effects are less affected by violations of the other assumptions.