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st: relative difference-in-difference - what to use as a denominator?


From   Martin H´┐Żllsten <[email protected]>
To   <[email protected]>
Subject   st: relative difference-in-difference - what to use as a denominator?
Date   Wed, 16 Jan 2008 20:09:27 +0100

Dear statalist users,

This is a non-technical question on difference-in-difference estimation, or rather how to obtain a
relative estimate. The data consists of a pre-treatment and a post-treatment measure for
observations with and without treatment. However, the DiD-estimate has a difficult interpretation
since the scale of the outcome is, in this specific case, obscure. The idea is to divide the
(absolute) DiD-estimate with the level of the outcome to obtain a relative estimate. But what should
I use as denominator? The data has a v e r y strong trend, and the relative estimates differ
strongly if I use the average level of pre-treatment values or the average of post-treatment values.
(Taking logs of the outcome is unfortunately not an option due to the nature of the outcome
measure).  Is there a strong theory for guiding this decision, or is this just ad hoc (i.e., like a
form of scaling indeterminacy)?

Many thanks in advance,

Martin






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