Lecture 6 Evaluation Designs: Quasi Experiments

Gang He

March 11, 2025

Recap lecture 5

  • Evaluation design
  • RCT
  • Case: Microfinance and RCT
  • Proposal

Today’s agenda

  • Quasi-experimental design
    • Regression discontinuity
    • Difference in differences
    • Matching
  • Case: Air quality and Life Expectancy

Capturing the wedege

Evaluation designs

  • Experimental
    • Randomised controled trial
  • Quasi-experimental
    • Instrumental variable (IV)
    • Regression discontinuity (RDD)
    • Difference in differences (DiD)
  • Observational (Non-experimental)
    • Time–series analysis (Pre- and post-intervention studies)
    • Cross-sectional surveys
    • Case studies

Instrumental variable design

An instrumental variable:

  • It influences the likelihood of participating in a program
  • Outside of the participant’s control
  • Unrelated to the participant’s characteristics

Examples:

  • Test scores
  • Geographic proximity
  • Month of birth
  • Rainfall

RDD design

Application: programs that have a continuous eligibility index with clearly defined eligibility threshold to determine who is eligible and who is not.

  • The index must rank people or units in continuous way.
  • The index must have a clearly defined cutoff score.
  • The cutoff must be unique to the program of interest.
  • The score of particular individual or unit cannot be manipulated.

RDD example: Farm baseline

RDD example: Farm followup

Heating, air quality, and life-expectancy

DiD design

  • Compares the CHANGES in outcomes over time between the treatment group the comparison group.
  • First Difference: time-varying factors
  • Second Difference: treatment effects
  • Trend differences

DiD example: Employment

Matching

Matching uses large data sets and statistical techniques to construct the best possible comparison group based on observed characteristics.

For every possible unit under treatment, it attempts to fi nd a nontreatment unit (or set of nontreatment units) that has the most similar characteristics possible.

Curse of dimensionality

Increased matching dimensions reduces matching possibilities.

Propensity score matching

Uses a probability score to find the best possible comparison group.

Key issues in matching

  • Matching can use only observed characteristics
  • Using only characteristics that are not affected by the program
  • Eesimation are only as good as the characteristics used for matching (understanding the criteria for participation)

Story

Michael Greenstone and Environmental Economics

References

Chen, Yuyu, Avraham Ebenstein, Michael Greenstone, and Hongbin Li. 2013. “Evidence on the Impact of Sustained Exposure to Air Pollution on Life Expectancy from China’s Huai River Policy.” Proceedings of the National Academy of Sciences, July. https://doi.org/10.1073/pnas.1300018110.
Gertler, Paul J., Sebastian Martinez, Patrick Premand, Laura B. Rawlings, and Christel M. J. Vermeersch. 2016. Impact Evaluation in Practice, Second Edition. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-0779-4.