Determination of the optimal number of strata for bias reduction in propensity score matching.

Previous research implementing stratification on the propensity score has generally relied on using five strata, based on prior theoretical groundwork and minimal empirical evidence as to the suitability of quintiles to adequately reduce bias in all cases and across all sample sizes. This study investigates bias reduction across varying number of strata and sample sizes via a large-scale simulation to determine the adequacy of quintiles for bias reduction under all conditions. Sample sizes ranged from 100 to 50,000 and strata from 3 to 20. Both the percentage of bias reduction and the standardized selection bias were examined. The results show that while the particular covariates in the simulation met certain criteria with five strata that greater bias reduction could be achieved by increasing the number of strata, especially with larger sample sizes. Simulation code written in R is included.