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In-person
session 8

October 10, 2022

PMAP 8521: Program evaluation
Andrew Young School of Policy Studies

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Plan for today

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Plan for today

Models vs. designs

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Plan for today

Models vs. designs

Interactions and regression

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Plan for today

Models vs. designs

Interactions and regression

Simple diff-in-diff

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Plan for today

Models vs. designs

Interactions and regression

Simple diff-in-diff

Two-way fixed effects

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Models vs. designs

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2021 econ Nobel winners
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Alan Krueger
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Alan Krueger died by suicide in 2019

Nobel PA/NJ
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NPR casual inference
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Design-based vs.
model-based inference

Special situations vs. controlling for stuff

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How would you know when it is appropriate to use a quasi-experiment over an RCT?

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Identification strategies

The goal of all these methods is to isolate
(or identify) the arrow between treatment → outcome

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Identification strategies

The goal of all these methods is to isolate
(or identify) the arrow between treatment → outcome

Model-based identification

DAGs Matching Inverse probability weighting

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Identification strategies

The goal of all these methods is to isolate
(or identify) the arrow between treatment → outcome

Model-based identification

DAGs Matching Inverse probability weighting

Design-based identification

Randomized controlled trials Difference-in-differences

Regression discontinuity Instrumental variables

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Model-based identification

Use a DAG and do-calculus to isolate arrow

Education earnings DAG

Core assumption:
selection on observables

Everything that needs to
be adjusted is measurable;
no unobserved confounding

Big assumption!

This is why lots of people don't like DAG-based adjustment

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Design-based identification

Use a special situation to isolate arrow

RCTs

Use randomization
to remove confounding

RCT DAG
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Design-based identification

Use a special situation to isolate arrow

RCTs

Use randomization
to remove confounding

RCT DAG

Difference-in-differences

Use before/after & treatment/control
differences to remove confounding

Diff-in-diff DAG
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Which is better or more credible?
RCTs, quasi experiments,
or DAG-based models?

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The (wrong!) causality continuum
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There's no hierarchy!

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Interactions and regression

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Can we talk more about interaction terms and how to interpret them?

Are interaction effects in regression always more accurate of a difference than running a "regular" regression without them?

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Regression is just fancy averages!

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Simple diff-in-diff

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Lambeth and Southwark-Vauxhall
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1849

Cholera deaths per 100,000

Southwark & Vauxhall: 1,349

Lambeth: 847

1854

Cholera deaths per 100,000

Southwark & Vauxhall: 1,466

Lambeth: 193

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Bedtime math
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Bedtime math diff-in-diff
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When doing your subtracting to get
your differences in the matrix, is it better
to do the vertical or horizontal subtractions?

Are there situations where
one is preferable to the other?

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Why are we learning
two ways to do diff-in-diff?
(2x2 matrix vs. lm())

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What happened to confounding??

Now we're only looking
at just two "confounders"?

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The parallel trends assumption takes care of that

What group level is best for comparison? For example, if we are looking at policy change in NJ, is it best to compare with just one or two similar states? How similar do the populations need to be?

Wouldn't matching be better?

Do we have to think about balance when dealing with observational data in diff in diff?

Two-way fixed effects (TWFE)

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  • Multiple states/groups are possible - that's TWFE
  • Wouldn't matching be better? Sure, if you're doing state-level stuff. But their data was restaurant level

  • Balance: Maybe. With just two states/villages/countries/whatever, yes. With lots, the state/year fixed effects pick up those trends for you

Minimum legal drinking age

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Mastering Metrics Figure 5.4
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Mastering Metrics Figure 5.5
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Mastering Metrics Figure 5.6
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MLDA reduction

Two states: Alabama vs. Arkansas

Mortality = β0+β1 Alabama+β2 After 1975 + β3 (Alabama×After 1975)

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Organ donations

Two states: California vs. New Jersey

Donation rate = β0+β1 California+β2 After Q22011 + β3 (California×After Q22011)

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Two-way fixed effects
(TWFE)

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Two states: Alabama vs. Arkansas

Mortality = β0+β1 Alabama+β2 After 1975 + β3 (Alabama×After 1975)

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All states: Treatment == 1
if legal for 18-20-year-olds to drink

Mortality = β0+β1 Treatment+β2 State+β3 Year

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Mortality = β0+β1 Alabama+β2 After 1975 + β3 (Alabama×After 1975)

vs.

Mortality = β0+β1 Treatment+β2 State+β3 Year

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Mortality = β0+β1 Alabama+β2 After 1975 + β3 (Alabama×After 1975)

vs.

Mortality = β0+β1 Treatment+β2 State+β3 Year

vs.

Mortality = β0+β1 Treatment+β2 State+β3 Year +β4 (State×Year)

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Mastering Metrics Table 5.2
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Donation rate = β0+β1 California+β2 After Q22011 + β3 (California×After Q22011)

vs.

Donation rate = β0+β1 Treatment +β2 State+β3 Quarter

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What about this
staggered treatment stuff?

See this

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This is good for ethical reasons!

Blog post

Sensitivity analysis

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How do we know when we've got
the right confounders in our DAG?

How do we solve the fact that
we have so many unknowns in our DAG?

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OVB
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Plan for today

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