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Direct and Indirect Effects Based on Difference-in-Differences With an Application to Political Preferences Following the Vietnam Draft Lottery

Author

Listed:
  • Eva Deuchert
  • Martin Huber
  • Mark Schelker

Abstract

We propose a difference-in-differences approach for disentangling a total treatment effect within specific subpopulations into a direct effect and an indirect effect operating through a binary mediating variable. Random treatment assignment along with specific common trend and effect homogeneity assumptions identify the direct effects on the always and never takers, whose mediator is not affected by the treatment, as well as the direct and indirect effects on the compliers, whose mediator reacts to the treatment. In our empirical application, we analyze the impact of the Vietnam draft lottery on political preferences. The results suggest that a high draft risk due to the draft lottery outcome leads to an increase in mild preferences for the Republican Party, but has no effect on strong preferences for either party or on specific political attitudes. The increase in Republican support is mostly driven by the direct effect not operating through the mediator that is military service.

Suggested Citation

  • Eva Deuchert & Martin Huber & Mark Schelker, 2019. "Direct and Indirect Effects Based on Difference-in-Differences With an Application to Political Preferences Following the Vietnam Draft Lottery," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(4), pages 710-720, October.
    • Handle: RePEc:taf:jnlbes:v:37:y:2019:i:4:p:710-720
    DOI: 10.1080/07350015.2017.1419139
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    Cited by:

    1. Brewer, Mike & Dang, Thang & Tominey, Emma, 2024. "Universal Credit: Welfare reform and mental health," Journal of Health Economics, Elsevier, vol. 98(C).
    2. Zihan Zhang & Lianyan Fu & Dehui Wang, 2026. "Difference-in-Differences using Double Negative Controls and Graph Neural Networks for Unmeasured Network Confounding," Papers 2601.00603, arXiv.org.
    3. Mellace, Giovanni & Pasquini, Alessandra, 2019. "Identify More, Observe Less: Mediation Analysis: Mediation Analysis Synthetic Control," Discussion Papers on Economics 12/2019, University of Southern Denmark, Department of Economics.
    4. Sonia Bhalotra & Martin Karlsson & Therese Nilsson & Nina Schwarz, 2022. "Infant Health, Cognitive Performance, and Earnings: Evidence from Inception of the Welfare State in Sweden," The Review of Economics and Statistics, MIT Press, vol. 104(6), pages 1138-1156, November.
    5. Wunsch, Conny & Strobl, Renate, 2018. "Identification of causal mechanisms based on between-subject double randomization designs," CEPR Discussion Papers 13028, Centre for Economic Policy Research.
    6. Viviana Celli, 2019. "Causal Mediation Analysis in Economics: objectives, assumptions, models," Working Papers 12/19, Sapienza University of Rome, DISS.
    7. Doerr Annabelle & Strittmatter Anthony, 2021. "Identifying Causal Channels of Policy Reforms with Multiple Treatments and Different Types of Selection," Journal of Econometric Methods, De Gruyter, vol. 10(1), pages 67-88, January.
    8. Hersche Markus & Moor Elias, 2020. "Identification and Estimation of Intensive Margin Effects by Difference-in-Difference Methods," Journal of Causal Inference, De Gruyter, vol. 8(1), pages 272-285, January.
    9. Holm, Anders & Breen, Richard, 2023. "Causal Mediation in Panel Data – Estimation Based on Difference in Differences," SocArXiv kwscz, Center for Open Science.
    10. Doerr, Leo M & Leppert, Elias B & Maennig, Wolfgang, 2025. "Olympic Games and democracy," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1073-1091.
    11. Zhang, Yupeng & Yang, Yuchuan, 2025. "Can governmental innovation subsidies promote firm innovative economic efficiency? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 106(C).
    12. Viviana Celli, 2022. "Causal mediation analysis in economics: Objectives, assumptions, models," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 214-234, February.
    13. Martin Huber & Sarina Joy Oberhansli, 2026. "Difference-in-differences for mediation analysis using double machine learning," Papers 2602.23877, arXiv.org.
    14. Giovanni Mellace & Alessandra Pasquini, 2019. "Identify More, Observe Less: Mediation Analysis Synthetic Control," CEIS Research Paper 474, Tor Vergata University, CEIS, revised 20 Nov 2019.
    15. repec:osf:socarx:kwscz_v1 is not listed on IDEAS
    16. Martin Huber & Mark Schelker & Anthony Strittmatter, 2022. "Direct and Indirect Effects based on Changes-in-Changes," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(1), pages 432-443, January.
    17. Ghislandi, Simone & Renner, Anna-Theresa & Varghese, Nirosha Elsem, 2025. "The impact of budget cuts on individual patient health: Causal evidence from hospital closures," Journal of Health Economics, Elsevier, vol. 101(C).
    18. Masayuki Sawada, 2019. "Noncompliance in randomized control trials without exclusion restrictions," Papers 1910.03204, arXiv.org, revised Jun 2021.
    19. Rajkumar, Vidya Bharathi, 2021. "Male Migration and the Emergence of Female Farm Management in India," 2021 Conference, August 17-31, 2021, Virtual 315329, International Association of Agricultural Economists.
    20. Lin, Lin & He, Min & Sun, Wenkai, 2025. "Security fosters generosity: Social security protection and charitable giving," World Development, Elsevier, vol. 196(C).

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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