Project Evaluation from Application to Econometric Theory: A Qualitative Explanation of Difference in Difference (DiD) Approach
International Journal of Data Science and Analysis
Volume 3, Issue 1, February 2017, Pages: 5-12
Received: Sep. 1, 2016; Accepted: Apr. 14, 2017; Published: Apr. 26, 2017
Views 2303      Downloads 129
Author
Muhammad Ateeq-ur-Rehman, Gutenberg School of Management and Economics, Johannes Gutenberg University Mainz, Mainz, Germany; Lahore Business School, the University of Lahore, Lahore, Pakistan
Article Tools
Follow on us
Abstract
The main objective of this study is to show the importance of the Difference in Difference (DiD) method and its applicability in the field of human and social sciences. The DiD method is one of the famous tools in econometrics to investigate the causal effect of the policy before and after treatment or policy. Why difference in difference method is most important in these days? Because the traditional methods requires more instructions as compare to DiD method which is easier and applicable without randomization of the data. The difference is compared with treated and non-treated group in two time’s period model with the same unit of data. The first difference removes the time-invariant factors while Difference in Difference removes the time-variant factors of the model and the remaining statistic shows the original impact of the treatment or policy.
Keywords
Econometrics, Difference in Difference, Policy
To cite this article
Muhammad Ateeq-ur-Rehman, Project Evaluation from Application to Econometric Theory: A Qualitative Explanation of Difference in Difference (DiD) Approach, International Journal of Data Science and Analysis. Vol. 3, No. 1, 2017, pp. 5-12. doi: 10.11648/j.ijdsa.20170301.12
Copyright
Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Gertler, P. J., Martinez, S., Premand, P., Rawlings, L. B., and Vermeersch, C. M. J., (2011), Impact evaluation in practice, The World Bank, DOI: 10.1596/978-0-8213-8541-8.
[2]
Lechner, M., (2011), the Estimation of Causal Effects by Difference-in-Difference Methods’’, Department of Economics, University of St. Gallen, Discussion Paper, No. 2010-28.
[3]
Abadie, A. (2005), Semiparametric Difference-in-Differences Estimators, Review of Economic Studies, No. 72, pp. 1–19.
[4]
Galiani, S., Gertler, P. and Schargrodsky, E. (2005), Water for Life: The Impact of the Privatization of Water Services on Child Mortality, Journal of Political Economy, Vol. 113, No. 1, pp. 83-120.
[5]
Snow, J. (1855), On the Mode of Communication of Cholera, 2nd edition, London.
[6]
Rose, A. M. (1952), Needed Research on the Mediation of Labour Disputes, Personal Psychology, No. 5, pp. 187-200.
[7]
Obenauer, M., Niebburg, B. M., (1915), Effect of Minimum-wage Determinations in Oregon, Bulletin of the United States Bureau of Labor Statistics, No. 176. Washington, D. C.
[8]
Simon, J. L. (1966), The Price Elasticity of Liquor in the US and a simple Method of Determination , Econometrica, No. 34, pp. 193-205.
[9]
Peluffo, A. (2010), Trade Liberalization, Productivity, Employment and Wages: A Difference-in-Difference Approach , Instituto de Economía, FCEA, Universidad de la República, Uruguay.
[10]
Mcclure, R. C. and Starr, M. A. (2012), Using difference in differences to estimate damages in healthcare antitrust: A case study of Marshfield Clinic, Working Paper Series, American University, WD.
[11]
Jiménez, J. L. and Perdiguero, J. (2012), Mergers, Difference - In -D Ifference And Concentrated Markets: Why Firms Do Not Increase Prices? University of Barcelona, IREA working paper, No. 201205.
[12]
Matisoff, D. C. (2011), Privatizing Climate Change Policy: is there a public benefit? Working Paper, No. 60, Georgia Institute of Technology, Atlanta.
[13]
Schultz, T. P. (2004), School subsidies for the poor: evaluating the Mexican Progresa poverty program, Journal of Development Economics, Vol. 74, pp. 199–250.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186