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Mastering Impact Evaluation: Difference-In-Difference

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Difference-In-Difference: Mastering Impact Evaluation

Session Report
Riya Kumari Shah

An online International Summer School Program on “Data, Monitoring and Evaluation” is a two-month immersive online hands-on certificate training course organized by IMPRI Impact and Policy Research Institute, New Delhi. The day 8 of the program started with a session on “Introduction to Impact Evaluation Methods” by Mr. Rakesh Pandey.

Introduction to Impact Evaluation Methods:

The online International Summer School Program on “Data, Monitoring, and Evaluation,” orchestrated by the IMPRI Impact and Policy Research Institute in New Delhi, unfolds as a two-month immersive online hands-on certificate training course. The eighth day of this enlightening program commenced with a pivotal session led by Mr. Rakesh Pandey, focusing on the crucial theme of “Introduction to Impact Evaluation Methods.”

Unveiling the Power of Difference-In-Difference:

Mr. Pandey embarked on a profound exploration of the Difference-In-Difference method, shedding light on its prevalence and potential pitfalls within the realm of impact evaluation studies. He articulated the method’s appeal, emphasizing its role as the most widely used approach with equal probabilities of yielding insightful results or, conversely, erroneous outcomes.

Exploring Static and Dynamic Treatment Designs:

Within the expansive landscape of impact evaluation, Mr. Pandey meticulously dissected static and dynamic treatment designs. Using seat belt laws as a practical illustration, he clarified the distinctions between the two. A static approach was traced back to the dataset of state seat belt laws, illustrating its lack of temporal evolution. In contrast, the dynamic treatment design considered changes over time, uncovering potential biases in past studies that had attempted to analyze dynamic treatments before 2018.

Distinguishing Difference-In-Difference from RCT:

Navigating the intricacies of impact evaluation, Mr. Pandey elucidated the crucial differences between Difference-In-Difference and Randomized Control Trials (RCT). Through a compelling example involving the education department of Bihar, he illustrated the limitations of RCT when treatments are not randomly assigned, underscoring the significance of nuanced methodologies.

Understanding the Essence of Difference-In-Difference Estimation:

Transitioning into the mathematical core of Difference-In-Difference estimation, Mr. Pandey unraveled the key elements. The session delved into the intricacies of comparing treatment and control groups over time, emphasizing the significance of considering baseline and endline data points. The formula (E[Y|T=1, Post=1]-E[y|t=1,Post=0])-(e[y|t=0,Post=1]-E[Y|T=0, Post=0]) was explained, elucidating its components and the nuanced interpretation of results.

Assumptions and Foundations of Difference-In-Difference:

The underpinnings of the Difference-In-Difference method were further explored, introducing crucial assumptions. Parallel trends, pre-intervention trend data, and the need for at least three observations over time were highlighted. The session emphasized the significance of observing trends before interventions and the necessity for multiple observations per period.

Appealing Aspects of Difference-In-Difference:

Mr. Pandey engaged with the audience, unraveling the researcher’s perspective on why Difference-In-Difference holds widespread appeal. Five key points emerged, emphasizing the method’s focus on trends rather than levels, its similarity to Fixed Effects (FE) as a within estimator, and its ability to estimate differences between treatment and control groups while mitigating bias from time-invariant differences.

Application and Conclusion:

The session reached its zenith as Mr. Rakesh Pandey applied the Difference-In-Difference method to real-world scenarios. Graphs were dissected, past data was analyzed, and the session concluded with a robust discussion. Students’ queries were addressed, and the session was hailed as an enriching learning experience, solidifying understanding and clarity on the nuances of impact evaluation methods. The comprehensive nature of the discussion provided attendees with a robust foundation for their ongoing exploration into impact evaluation methodologies and their practical applications.

Acknowledgment: This article was posted by Trisha Shivdasan, a research intern at IMPRI.

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