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The Promise and Pitfalls of Differences-in-Differences: Reflections on ‘16 and Pregnant’ and Other Applications

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  • Ariella Kahn-Lang
  • Kevin Lang

Abstract

We use the exchange between Kearney/Levine and Jaeger/Joyce/Kaestner on “16 and Pregnant” to reexamine the use of DiD as a response to the failure of nature to properly design an experiment for us. We argue that 1) any DiD paper should address why the original levels of the experimental and control groups differed, and why this would not impact trends, 2) the parallel trends argument requires a justification of the chosen functional form and that the use of the interaction coefficients in probit and logit may be justified in some cases, and 3) parallel trends in the period prior to treatment is suggestive of counterfactual parallel trends, but parallel pre-trends is neither necessary nor sufficient for the parallel counterfactual trends condition to hold. Importantly, the purely statistical approach uses pretesting and thus generates the wrong standard errors. Moreover, we underline the dangers of implicitly or explicitly accepting the null hypothesis when failing to reject the absence of a differential pre-trend.

Suggested Citation

  • Ariella Kahn-Lang & Kevin Lang, 2018. "The Promise and Pitfalls of Differences-in-Differences: Reflections on ‘16 and Pregnant’ and Other Applications," NBER Working Papers 24857, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:24857
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    Cited by:

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    7. Sansone, Dario, 2019. "Pink work: Same-sex marriage, employment and discrimination," Journal of Public Economics, Elsevier, vol. 180(C).
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    9. Grossman, Daniel & Khalil, Umair & Ray, Arijit, 2019. "Terrorism and early childhood health outcomes: Evidence from Pakistan," Social Science & Medicine, Elsevier, vol. 237(C), pages 1-1.
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    11. Michał Myck & Mateusz Najsztub, 2020. "Implications of the Polish 1999 administrative reform for regional socio‐economic development," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 28(4), pages 559-579, October.
    12. Sujeong Park & David Powell, 2020. "Is the Rise in Illicit Opioids Affecting Labor Supply and Disability Claiming Rates?," NBER Working Papers 27804, National Bureau of Economic Research, Inc.
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    15. Ismael Sanz & J .D. Tenaa, 2020. "A Natural Experiment on the Effect of Instruction Time and Quality: Lessons for the Covid-19 Outbreak," Working Papers 202032, University of Liverpool, Department of Economics.
    16. Christopher Carpenter & Dario Sansone, 2020. "Cigarette Taxes and Smoking Among Sexual Minority Adults," NBER Working Papers 26692, National Bureau of Economic Research, Inc.
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    18. Deepak Varshney & Devesh Roy & J. V. Meenakshi, 2020. "Impact of COVID-19 on agricultural markets: assessing the roles of commodity characteristics, disease caseload and market reforms," Indian Economic Review, Springer, vol. 55(1), pages 83-103, November.
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    20. Sonia Bhalotra & Damian Clarke & Joseph Gomes & Atheendar Venkataramani, 2018. "Maternal mortality and women's political participation," WIDER Working Paper Series wp-2018-58, World Institute for Development Economic Research (UNU-WIDER).
    21. Cook, Jason B., 2018. "Race-Blind Admissions, School Segregation, and Student Outcomes: Evidence from Race-Blind Magnet School Lotteries," IZA Discussion Papers 11909, Institute of Labor Economics (IZA).
    22. Cenjie Liu & Chunbo Ma & Rui Xie, 2020. "Structural, Innovation and Efficiency Effects of Environmental Regulation: Evidence from China’s Carbon Emissions Trading Pilot," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(4), pages 741-768, April.
    23. von Haaren, Paula & Klonner, Stefan, 2020. "Maternal cash for better child health? The impacts of India’s IGMSY/PMMVY maternity benefit scheme," Working Papers 0689, University of Heidelberg, Department of Economics.
    24. Yuval Mazar, 2018. "The effect of child allowances on the labor supply: Evidence from the early 2000s," Bank of Israel Working Papers 2018.07, Bank of Israel.
    25. Jason M. Lindo & Isaac D. Swensen & Glen R. Waddell, 2020. "Persistent Effects of Violent Media Content," NBER Working Papers 27240, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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