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Unformatted text preview: Regression Discontinuity Introductory Econometrics Douglas G. Steigerwald UC Santa Barbara March 2006 D. Steigerwald (UCSB) Regression Discontinuity 03/06 1 / 11 Intuition Reference: Mostly Harmless Econometrics Chapter 6 Rule leads to identi&cation Are National Merit Scholars more likely to go to graduate school? D. Steigerwald (UCSB) Regression Discontinuity 03/06 2 / 11 Intuition Reference: Mostly Harmless Econometrics Chapter 6 Rule leads to identi&cation Are National Merit Scholars more likely to go to graduate school? Rule: Award Scholarship if (PSAT) score & c D. Steigerwald (UCSB) Regression Discontinuity 03/06 2 / 11 Intuition Reference: Mostly Harmless Econometrics Chapter 6 Rule leads to identi&cation Are National Merit Scholars more likely to go to graduate school? Rule: Award Scholarship if (PSAT) score & c Compare: students with score just below c to students with score just above c D. Steigerwald (UCSB) Regression Discontinuity 03/06 2 / 11 Sharp Discontinuity De&nition D i treatment for observation i D i = & 1 if x i & x 0 if x i < x x known threshold D i deterministic function of x i D i discontinuous function of x i Example: D i = 1 if i received scholarship x i score for i x threshold (rule) for awarding scholarship D. Steigerwald (UCSB) Regression Discontinuity 03/06 3 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups D. Steigerwald (UCSB) Regression Discontinuity 03/06 4 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups E [ Y i ] = E [ Y 1 i ] = + D. Steigerwald (UCSB) Regression Discontinuity 03/06 4 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups E [ Y i ] = E [ Y 1 i ] = + H : = H 1 : > D. Steigerwald (UCSB) Regression Discontinuity 03/06 4 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups E [ Y i ] = E [ Y 1 i ] = + H : = H 1 : > Y 1 & Y D. Steigerwald (UCSB) Regression Discontinuity 03/06 4 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups E [ Y i ] = E [ Y 1 i ] = + H : = H 1 : > Y 1 & Y Issue: no individual is in both groups D. Steigerwald (UCSB) Regression Discontinuity 03/06 4 / 11 Constant Mean Model Outcome  attending graduate school Treatment  receiving scholarship Y i outcome without treatment Y 1 i...
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 Fall '08
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 Econometrics

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