Regression Discontinuity Designs

Regression Discontinuity Designs - NBER WORKING PAPER...

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Unformatted text preview: NBER WORKING PAPER SERIES REGRESSION DISCONTINUITY DESIGNS IN ECONOMICS David S. Lee Thomas Lemieux Working Paper 14723 http://www.nber.org/papers/w14723 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 February 2009 We thank David Autor, David Card, John DiNardo, Guido Imbens, and Justin McCrary for suggestions for this article, as well as for numerous illuminating discussions on the various topics we cover in this review. We also thank two anonymous referees for their helpful suggestions and comments. Emily Buchsbaum, Elizabeth Debraggio, Enkeleda Gjeci, Ashley Hodgson, Xiaotong Niu, and Zhuan Pei provided excellent research assistance. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. 2009 by David S. Lee and Thomas Lemieux. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including notice, is given to the source. Regression Discontinuity Designs in Economics David S. Lee and Thomas Lemieux NBER Working Paper No. 14723 February 2009 JEL No. C1,H0,I0,J0 ABSTRACT This paper provides an introduction and "user guide" to Regression Discontinuity (RD) designs for empirical researchers. It presents the basic theory behind the research design, details when RD is likely to be valid or invalid given economic incentives, explains why it is considered a "quasi-experimental" design, and summarizes different ways (with their advantages and disadvantages) of estimating RD designs and the limitations of interpreting these estimates. Concepts are discussed using using examples drawn from the growing body of empirical research using RD. David S. Lee Industrial Relations Section Princeton University Firestone Library A-16-J Princeton, NJ 08544 and NBER davidlee@princeton.edu Thomas Lemieux Department of Economics University of British Columbia #997-1873 East Mall Vancouver, BC V6T 1Z1 Canada and NBER tlemieux@interchange.ubc.ca 1 Introduction Regression Discontinuity (RD) designs were first introduced by Thistlethwaite and Campbell (1960) as a way of estimating treatment effects in a non-experimental setting where treatment is determined by whether an observed forcing variable exceeds a known cutoff point. In their initial application of RD designs, Thistlethwaite and Campbell (1960) analyzed the impact of merit awards on future academic outcomes, using the fact that the allocation of these awards was based on an observed test score. The main idea behind the research design was that individuals with scores just below the cutoff (who did not receive the award) were good comparisons to those just above the cutoff (who did receive the award). Although this evaluation strategy has been around for almost fifty years, it did not attract much attention in economics until relatively recently....
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Regression Discontinuity Designs - NBER WORKING PAPER...

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