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Re: st: policy simulation

From   Maarten Buis <[email protected]>
To   [email protected]
Subject   Re: st: policy simulation
Date   Tue, 24 Jul 2012 09:13:49 +0200

On Tue, Jul 24, 2012 at 2:46 AM, Shikha Sinha wrote:
> I want to conduct a counterfactual policy simulation in state. I
> estimate the following model:
> Y = b1X1 + b2X2 +b3ORT +e
> ORT is the main independent variable and is binary. The estimated b3
> coefficient is 0.06. Now I want to answer the counterfactual question:
> what would have been b3 if everyone got access to ORT? How do I get
> this?

You don't, because in that case b3 cannot be estimated. b3 is a
comparison of two groups: ORT=1 and ORT=0. In order to estimate b3 you
need observations in both groups. If one group is empty than you
cannot estimate the expected outcome in that group, and thus you
cannot estimate the comparison.

I suspect you don't want a "counter factual b3" but something else, it
is now up to you to decide what that "something else" is.

-- Maarten

Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen
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