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Regression Discontinuity - Transparencies

# Regression Discontinuity - Transparencies - Regression...

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Regression Discontinuity STP Advanced Econometrics Lecture Douglas G. Steigerwald UC Santa Barbara March 2006 D. Steigerwald (Institute) Regression Discontinuity 03/06 1 / 11

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Intuition Reference: Mostly Harmless Econometrics Chapter 6 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 (Institute) Regression Discontinuity 03/06 2 / 11
D i treatment for observation i D i = 1 if x i x 0 0 if x i < x 0 x 0 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 0 threshold (rule) for awarding scholarship D. Steigerwald (Institute) Regression Discontinuity 03/06 3 / 11

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Constant Mean Model Outcome - attending graduate school Treatment - receiving scholarship Y 0 i outcome without treatment Y 1 i outcome with treatment To measure impact: compare means for two groups E [ Y 0 i ] = α E [ Y 1 i ] = α + ρ H 0 : ρ = 0 H
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Regression Discontinuity - Transparencies - Regression...

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