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8 votes
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What are some important papers using difference-in-difference in economics?

This is far from exhaustive, but hopefully it can get you started! (I'd recommend skimming most of them, then really focusing on those where the application and/or modeling environment is uniquely ...
AndrewC's user avatar
  • 1,380
6 votes
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What shoud we do when the expected treatment overlaps control sample in DID?

Your first quote seems to be given as an explanation of how they constructed Figure 1 (however I cannot be sure since you did not state pagenumber for the quote). Anyway, Figure 1 compares a treatment ...
Jesper Hybel's user avatar
  • 3,366
5 votes
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In difference-in-differences approach, would it be possible to add a dummy variable indicating whether a data point belong to treatment group?

It depends on the estimated model. Let me use the example provided in Mostly Harmless Econmetrics. The experiment Suppose we are interested in the effect of the minimum wage on employment. Card and ...
emeryville's user avatar
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5 votes
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Is program evaluation (DiD, RD) a structural estimation?

I skimmed through the slides you linked. I think professor Haile in these slides is trying to introduce the concepts of "structural" and "reduced-form" models in a very broad sense....
easyliving's user avatar
4 votes

How to correct selection bias in an econometric analysis?

The parallel trends assumption of Diff-in-diff is essentially an assumption that there is no selection bias. If you are curious about the parallel trends assumption, I encourage you to ask about it in ...
Michael Gmeiner's user avatar
3 votes
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Reverse DiD: or using always treated as control

In principle yes, but you would not use 'reverse treatment' but standard terminology. Here just withdrawal of some stimuli is the treatment. That is you would still code the withdrawal as $D=1$. For ...
1muflon1's user avatar
  • 56.4k
3 votes
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Difference in differences with one post and two treatment variables

Let $x_{it}$ denote after rejection, $z_{it}$ denote after granted, $y_{it}$ the outcome, and $w_i$ is US origin (which should not change over time and doesn't have a $t$ subscript). The two-way fixed ...
Michael Gmeiner's user avatar
3 votes
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What should we do if we find the anticipation effect?

The no anticipation assumption requires an individual outcome to not depend on future treatments. The best way you can do in the presence of anticipation effects is to use an disaggregated approach ...
Arne's user avatar
  • 210
3 votes

Two-year difference-in-differences model design

Is there some literature about two-year difference-in-difference (DiD) models? Of course. The traditional two-group/two-period DiD design was quite popular 25 years ago, though it's less common today ...
Thomas Bilach's user avatar
3 votes
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What does "inter alia" in "difference-indifference" testing?

It means "among other things". Its not an economics term, its standard English. It is somewhat pretentious, having been borrowed from Latin. Can I suggest that next time you don't understand ...
Paul Johnson's user avatar
2 votes

Are there any papers which used the event study methodology NOT in a financial market context?

See this Github page from David Novgorodsky and Bradley Setzler (University of Chicago) and the companion.
econbernardo's user avatar
2 votes
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Should we test for an anticipation effect in difference-in-differences when a natural event occurs?

A natural event is merely 'mimicking' the features of random assignment. As in your example, a tsunami is a natural event and may impact some regions, but not others. Is anticipation not a concern in ...
Thomas Bilach's user avatar
2 votes
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Diff-in-diff parallel trends with a positive outcome

The purpose of the parallel trends assumption is that it allows you to use changes in the control group to estimate what changes in the treatment group would have been in the counterfactual case where ...
NickCHK's user avatar
  • 626
2 votes

How to define treatment & control groups properly?

It looks to me like your control group would be all families with 1 or 0 kids. This is not ideal as you mention. If you observe all households before and after the transfer, then you could do a diff-...
Michael Gmeiner's user avatar
2 votes

Diff in Diff: Why do we control for unit and time fixed effects instead of just treatment status and pre/post indicator?

The 2-period model you wrote and the fixed effects (FE) models are equivalent for 2-periods and one treatment. The advantage of fixed effects, is that it extends to multiple periods and treatments (e....
BB King's user avatar
  • 6,148
2 votes
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How to correct selection bias in an econometric analysis?

As the other answer mentioned, if the Diff-in-diff assumptions hold, it should not be a problem. However, if you think selection might be invalidating your diff-in-diff assumptions, you have two ...
BB King's user avatar
  • 6,148
1 vote

Pooled difference-in-differences with limited panel

Yes, it does. The individual effects will be imprecisely estimated, but those coefficients are not of primary interest. The assumption you need is strict exogeneity, $E[\epsilon_{i,t}|X_i]=0$, where $...
Michael Gmeiner's user avatar
1 vote

Is matching combined with Diff-in-Diff a bad idea?

Is matching combined with Diff-in-Diff a bad idea? No. But, as with anything, it depends on the context. One point to consider is that you should match on pre-treatment characteristics, because ...
BB King's user avatar
  • 6,148
1 vote
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Is Difference-in-Differences still valid when treat or control is determined by subjects?

It is definitely an issue that needs to be considered. So, you are right that if the parallel trends assumption is not violated the approach is fine. Note the assumption in other words is that "...
BB King's user avatar
  • 6,148
1 vote

Diff-in-diff with two control groups: compare parallel trends

Background The typical thing to do is visually inspect the pre-treatment trends for the control and treatment groups. Whether you want it or not, you might be biased when looking at the visual ...
bajun65537's user avatar
1 vote

Diff-in-diff with two control groups: compare parallel trends

I'm not understanding-- could you please talk a little about why both can't be used here? It's been a while since I've really worked with DD, but as far as I'm aware, there's not real metric you can ...
Jared Greathouse's user avatar
1 vote

Discussing Difference-in-Difference Assumption of the treatment assigment

The first source you found is correct, parallel trend is not sufficient, you can find the same assumption mentioned in multiple places (e.g here). One of the identifying assumptions of DiD is that: $$...
1muflon1's user avatar
  • 56.4k
1 vote

Heterogeneity of time invariant characteristic in event study model

If you have a time-constant covariate $X$, you could include it but drop the individual fixed effects $\sigma_i$. (There could be perfect multicollinearity if you kept them.) Since you mentioned that $...
Richard Hardy's user avatar
1 vote

Why do we need Exogeneity of Treatment in a Diff in Diff

There is nothing in the econometrics that prevent you from measuring the difference in the difference when the treatment is endogenous. The concern is about interpreting the difference in the ...
BKay's user avatar
  • 16.3k
1 vote
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Differences in Differences with Small Violations of Parallel Trends

If you have violations of the parallel trend assumption then you will have biased estimates of the causal effect (assuming you satisfy the other assumptions). If you know the maximum that the two ...
BKay's user avatar
  • 16.3k
1 vote

Difference-in-difference robust to heterogeneous treatment effect - Gendron-Carrier et al. specification

My advice is to do a stacked diff-in-diff. For each treated unit, randomly assign a control unit. This forms a group, $g$. There will be several such groups. $$y_{igt} = \sum_{s}\beta_sT_{ig}d_{gs}+\...
Michael Gmeiner's user avatar
1 vote
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Do anticipation effects almost always bias the DiD ATE or ATT towards a null result and increase standard errors?

[a synthesis of Evangelos, Michael and my comments / posts] You are right if you have a simple, two-time period diff-in-diff and you believe parallel trends is true OR if you have staggered/...
Daycent's user avatar
  • 260
1 vote

How to explain the Difference-in-Difference for two groups two periods to undergraduate students?

If we compare two states (like two of the 50 states I mean) to see if some big policy change improves something, would that work? Where one state has the policy and one doesnt? TX has the policy and ...
Al Brown's user avatar
  • 121
1 vote

Reverse DiD: or using always treated as control

For those interested, there is work on this: Kim, K., & Lee, M. J. (2019). Difference in differences in reverse. Empirical Economics, 57(3), 705-725.
Papayapap's user avatar
  • 1,843
1 vote

In difference-in-differences approach, would it be possible to add a dummy variable indicating whether a data point belong to treatment group?

There are several reasons why that’s not done. For starters, DiD is most often estimated using panel FE regression, in order to have fixed effects that can control for time invariant unobservables ...
1muflon1's user avatar
  • 56.4k

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