Assuming there are no unequal shocks post-treatment, the DiD estimator is unbiased for the true treatment effect for the treated unit.

Question

BlackTom AI · Accepted Answer

The statement to evaluate is: 'Assuming there are no unequal shocks post-treatment, the DiD estimator is unbiased for the true treatment effect for the treated unit.'

First, consider the core idea of a difference-in-differences (DiD) design: it compares changes over time between treated and control groups to isolate the causal effect of a treatment, under certain assumptions. The crucial assumption here is that, in the absence of treatment, the treated and control groups would have followed parallel trends (the parallel trends assumption). If this holds and there are no differential (unequal) shocks after treatment, the DiD estimator captures the average treatment effect for the treated (ATT) without bias.

Now, evaluating the given statement:
- The condition 'no unequal shocks post-treatment' addresses post-treatment shocks that affect groups differently. If such shocks are absent, differential time-varying effects are minimized, supporting unbiased estimation.
- The DiD estimator targets the average treatment effect for the treated unit, under the parallel trends assumption. When parallel trends hold and shocks are not uneven across groups post-treatment, the DiD estimate should reflect the true ATT rather than being confounded by other post-treatment dynamics.

Potential caveats to keep in mind:
- If there were any violations of the parallel trends assumption prior to treatment, or if pre-treatment trends differ systematically, bias could still arise even without unequal shocks post-treatment.
- If there are other concurrent interventions or spillovers differentially affecting the treated group, those could bias the estimate despite no unequal post-treatment shocks.

However, given the phrasing of the statement and the typical DiD framework, the claim that the DiD estimator is unbiased for the true treatment effect for the treated unit under the stated conditions is the intended correct interpretation.

In summary, the reasoning supports that the assertion is correct under the conventional DiD assumptions (parallel trends and no unequal post-treatment shocks), making the statement logically consistent with how DiD identifies the ATT.

FA25_QTM_110_1 Quiz #8: Difference in Differences

Assuming there are no unequal shocks post-treatment, the DiD estimator is unbiased for the true treatment effect for the treated unit.

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Similar Questions

位置6的问题 Difference-in-differences is only valid when treated and untreated units have identical values for observable pre-treatment features.TrueFalseDon't Know清除选择

Select all of the statements that are true about Difference-In-Differences research designs:

The estimate produced by the DiD estimator in this example is:

For these two units, the parallel trends assumption is met.

Simply comparing the treated unit to the untreated unit in the post-treatment period would underestimate the true treatment effect.

The estimate produced by the DiD estimator for this example is:

For these two units, the parallel trends assumption is met.

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