Question

In: Economics

A-3. [10]. What assumption do you have to justify for the use of the differences-in-differences method...

A-3. [10]. What assumption do you have to justify for the use of the differences-in-differences method for estimating causal effects? What would you check in the data to provide evidence in support of this assumption?

Solutions

Expert Solution

Difference in differences is a statistical technique used in econometrics and quantitative research in the social sciences that attempts to mimic an experimental research design using observational study data, by studying the differential effect of a treatment on a 'treatment group' versus a 'control group' in a natural experiment.It calculates the effect of a treatment (i.e., an explanatory variable or an independent variable) on an outcome (i.e., a response variable or dependent variable) by comparing the average change over time in the outcome variable for the treatment group, compared to the average change over time for the control group. Although it is intended to mitigate the effects of extraneous factors and selection bias, depending on how the treatment group is chosen, this method may still be subject to certain biases (e.g., mean regression, reverse causality and omitted variable bias).

In contrast to a time-series estimate of the treatment effect on subjects (which analyzes differences over time) or a cross-section estimate of the treatment effect (which measures the difference between treatment and control groups), difference in differences uses panel data to measure the differences, between the treatment and control group, of the changes in the outcome variable that occur over time.


Related Solutions

if you meet the assumption that the errors are random, how do you justify the rest...
if you meet the assumption that the errors are random, how do you justify the rest of the assumption?
Which method (statistic) do you use for detecting the violation of the assumption for the repeated-measures...
Which method (statistic) do you use for detecting the violation of the assumption for the repeated-measures ANOVA? What is the assumption for the repeated-measures ANOVA?
5) What do you think is the best non-IT method, tool or technique in KM? Justify...
5) What do you think is the best non-IT method, tool or technique in KM? Justify your answer.? .
Which inventory cost flow method/assumption would be most suitable for antique furniture? Justify your choice.
Which inventory cost flow method/assumption would be most suitable for antique furniture? Justify your choice.
Why do economists use the assumption of rationality for criminals? What are some benefits to this...
Why do economists use the assumption of rationality for criminals? What are some benefits to this approach? What are some costs?
Do you have a favorite statistical method? Is there a statistical method that you think you...
Do you have a favorite statistical method? Is there a statistical method that you think you will/already use in your workplace? v
what is an internal control that you have seen in use? Do you think it is...
what is an internal control that you have seen in use? Do you think it is effective? Why or why not?
5. What simple assumption is behind the Franck‐Condon Principle? Why do we use a concept of...
5. What simple assumption is behind the Franck‐Condon Principle? Why do we use a concept of “vertical transitions” in understanding electronic spectra?
Question 1 What 3 method would you use to review and measure outcomes of the cultural...
Question 1 What 3 method would you use to review and measure outcomes of the cultural safety strategies you implemented for the information session?
You have decided to open a business. What ownership method will you use? Please make sure...
You have decided to open a business. What ownership method will you use? Please make sure to include three points to support your decision.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT