Question

Suppose we are studying the effects of expanded income supplement for senior citizens on their health. We use the two-group, to-period differences-in-differences setup, with working-age citizens as our control group.Which of the following is a key assumption for the validity of this identification strategy?

a. After the intervention, the average health trends would be the same for both groups.

b. In the absence of the intervention, theaverage health outcomes would be the same for both groups.

c. Before the intervention, the average health outcomes were the same for both groups.

d. In the absence of the intervention, theaverage health trends would be the same for both groups.

Answer 1

A) After the intervention, average health trends should be the same for both groups.

(We are trying to test the impact of an income supplement program for senior citizens on their health.And we have decided on working age populations as our control group.

*If the average health trends were the Same in the absence of intervention of there would have been no need to introduce the program .lt would mean that the health of senior citizens and working education was the same.

* We are trying to asses whether the program helped to improve the health conditions of senior citizens.lt is possible only if we assume that thetrends of senior citizens were same as working age population.So if our study prove that there was significant difference ,it indicates that the program failed in improving the health of senior citizens.lf the health trends are close or same,it indicates that the program was successful.