What Is a Difference-In-Difference Estimator? When Is It Appropriate to Use

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The Answer is Difference-in-difference estimators attempt to replicate randomized clinical trials by comparing treatment and control groups before and after a treatment is imposed to estimate the impact of a given policy intervention.They are appropriate to use when you can identify a clear treatment and when you can observe a sufficient number of observations in the treatment and control group.You perform difference-in-difference estimation by:(1)identifying a policy intervention that affected a specific "treatment" group but not a specific "control" group, (2)gathering data before and after the policy intervention for the two groups, (3)estimating the population regression model

y _ { i } = \beta _ { 0 } + \beta _ { 1 } ext { After } _ { i } + \beta _ { 2 } ext { Treatment } _ { i } + \beta _ { 3 } ( ext { After } * ext { Treatment } ) _ { i } + \varepsilon _ { i }

by OLS,and (4)interpreting

\hat { \beta } _ { 3 }

as the desired difference-in-differences estimator.

What Is a Difference-In-Difference Estimator? When Is It Appropriate to Use

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What Is a Difference-In-Difference Estimator? When Is It Appropriate to Use

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