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

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To begin, consider what the parallel trends assumption means in a DID or comparative study: prior to the treatment, the treated and control groups should exhibit similar trends in the outcome over time, i.e., their trajectories should be roughly parallel.
Option: True — The claim that the two units have parallel pre-treatment trends would require their pre-treatment slopes to be similar. In the graph, the blue (Treated) line and the red (Not Treated) line both move downward before the treatment, but their slopes are noticeably different: the red line declines more steeply than the blue line. This indicates non-parallel pre-treatment trends, which violates the assumption.
Option: False — Since the pre-treatment trajectories are not parallel (the slopes differ), the parallel trends assumption is not met for these two units. This means attributing post-treatment differences purely to the treatment would be inappropriate without additional adjustments or robustness checks.
A quick check of the visual evidence shows that after the dashed treatment line, the blue line begins to rise while the red line continues its steep downward path, further underscoring that the pre-treatment parallelism does not hold and the assumption is violated.
In summary, because the pre-treatment trends are not parallel, the statement asserting that the parallel trends assumption is met is incorrect.

FA25_QTM_110_1 Quiz #8: Difference in Differences

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

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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:

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

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

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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