  This study introduces a new approach to power analysis in the context of
estimating a local average treatment effect (LATE), where the study subjects
exhibit noncompliance with treatment assignment. As a result of distributional
complications in the LATE context, compared to the simple ATE context, there is
currently no standard method of power analysis for the LATE. Moreover, existing
methods and commonly used substitutes - which include instrumental variable
(IV), intent-to-treat (ITT), and scaled ATE power analyses - require specifying
generally unknown variance terms and/or rely upon strong and unrealistic
assumptions, thus providing unreliable guidance on the power of tests of the
LATE. This study develops a new approach that uses standardized effect sizes to
place bounds on the power for the most commonly used estimator of the LATE, the
Wald IV estimator, whereby variance terms and distributional parameters need
not be specified nor assumed. Instead, in addition to the effect size, sample
size, and error tolerance parameters, the only other parameter that must be
specified by the researcher is the compliance rate. Additional conditions can
also be introduced to further narrow the bounds on the power calculation. The
result is a generalized approach to power analysis in the LATE context that is
simple to implement.
