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Examination of the synthetic control method for evaluating health policies with multiple treated units

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Listed:
  • Kreif, Noémi
  • Grieve, Richard
  • Hangartner, Dominik
  • Turner, Alex James
  • Nikolova, Silviya
  • Sutton, Matt

Abstract

This paper examines the synthetic control method in contrast to commonly used difference-in-differences (DiD) estimation, in the context of a re-evaluation of a pay-for-performance (P4P) initiative, the Advancing Quality scheme. The synthetic control method aims to estimate treatment effects by constructing a weighted combination of control units, which represents what the treated group would have experienced in the absence of receiving the treatment. While DiD estimation assumes that the effects of unobserved confounders are constant over time, the synthetic control method allows for these effects to change over time, by re-weighting the control group so that it has similar pre-intervention characteristics to the treated group. We extend the synthetic control approach to a setting of evaluation of a health policy where there are multiple treated units. We re-analyse a recent study evaluating the effects of a hospital P4P scheme on risk-adjusted hospital mortality. In contrast to the original DiD analysis, the synthetic control method reports that, for the incentivised conditions, the P4P scheme did not significantly reduce mortality and that there is a statistically significant increase in mortality for non-incentivised conditions. This result was robust to alternative specifications of the synthetic control method

Suggested Citation

  • Kreif, Noémi & Grieve, Richard & Hangartner, Dominik & Turner, Alex James & Nikolova, Silviya & Sutton, Matt, 2016. "Examination of the synthetic control method for evaluating health policies with multiple treated units," LSE Research Online Documents on Economics 65074, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:65074
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    File URL: http://eprints.lse.ac.uk/65074/
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Method of the month: Synthetic control
      by Sam Watson in The Academic Health Economists' Blog on 2017-11-02 12:00:00

    Citations

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    Cited by:

    1. Roesel, Felix, 2017. "Do mergers of large local governments reduce expenditures? – Evidence from Germany using the synthetic control method," European Journal of Political Economy, Elsevier, vol. 50(C), pages 22-36.
    2. Ferman, Bruno & Pinto, Cristine Campos de Xavier & Possebom, Vitor Augusto, 2016. "Cherry picking with synthetic controls," Textos para discussão 420, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    3. Olper, Alessandro & Curzi, Daniele & Swinnen, Jo, 2015. "Trade Liberalization and Child Mortality: A Synthetic Control Method," 2015 Conference, August 9-14, 2015, Milan, Italy 212597, International Association of Agricultural Economists.
    4. repec:eee:jeeman:v:88:y:2018:i:c:p:283-299 is not listed on IDEAS
    5. Ferman, Bruno & Pinto, Cristine Campos de Xavier, 2016. "Revisiting the synthetic control estimator," Textos para discussão 421, FGV/EESP - Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    6. Kaul, Ashok & Klößner, Stefan & Pfeifer, Gregor & Schieler, Manuel, 2015. "Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates," MPRA Paper 83790, University Library of Munich, Germany.
    7. Alena Bachleitner, 2017. "Abolishing the Wealth Tax. A Case Study for Germany," WIFO Working Papers 545, WIFO.
    8. repec:eee:jhecon:v:53:y:2017:i:c:p:131-155 is not listed on IDEAS
    9. Ziebarth, Nicolas R., 2017. "Social Insurance and Health," IZA Discussion Papers 10918, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    synthetic control method; difference-in-differences; policy evaluation; pay-for-performance;

    JEL classification:

    • N0 - Economic History - - General

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