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Re: st: RD and binary outcomes


From   Austin Nichols <austinnichols@gmail.com>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: RD and binary outcomes
Date   Tue, 18 Oct 2011 11:23:13 -0400

D-Ta <altruist81@gmx.de>:
It is true that -rd- uses only linear models, but this is by design.
I have seen many papers using a parametric model, but it is not always
clear that the parametric model is justified.  The strength of the RD
design is that it relies on so few assumptions; using a parametric
model adds many more assumptions, and it is not always clear what they
are.  Think about what IV model you would run, using assignment to
treatment (one side or the other of the cutoff) as an instrument for
treatment received (for a linear model this is easy, otherwise not so
much); how would you weight (i.e. what kernel and bandwidth choice
would you make)?  I would want some simulation evidence for any
application of a parametric model to an RD design, using data built to
look like the problem at hand, before I trusted the results.  Smaller
standard errors are often desirable not because they are closer to the
truth, but because they lead to higher publication probabilities!  In
the case of RD, the large standard errors often reflect true
uncertainty or variability of estimates, not simply the sample loss
that accompanies focusing on the discontinuity.  But I am sympathetic;
looking only near the discontinuity increases internal validity at the
cost of sample and leads many apparently strong effects to look
statistically insignificant.  Start with a good simulation, and make
sure you put in some wiggles in the conditional mean functions (under
treatment and no treatment).

On Tue, Oct 18, 2011 at 9:41 AM, D-Ta <altruist81@gmx.de> wrote:
> Dear Stata-Users,
>
> I am currently working with the RD command provided by  Austin Nichols. I
> investigate continous as well as binary outcome variables. I use cubic and
> quartic parametric models as benchmarks to compare the RD results against.
>
> In the case of continous variables the RD command does fine (i.e. very close
> to the parametric model with even smaller standard errors). However, when
> looking at binary outcomes, the RD procedure produces much wider standard
> errors and the point estimates differ a lot from the parametric (probit)
> specifications.
>
> I assume that this is due to the underlying local linear model used by RD.
> (Perhaps it would be better to use a local logit(?))
>
> Am I right that -in its current format- the RD command is not the right tool
> to use in case of binary outcome variables?
>
> Many thanks
>
> Darjusch

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