Re: st: diff-in-diff in levels or in logs

[Jack Knife <olaf.collider@gmail.com>]

thank you very much maarten for your answer.

On 2 May 2013 15:44, Maarten Buis <maartenlbuis@gmail.com> wrote:
> On Thu, May 2, 2013 at 3:18 PM, Jack Knife  wrote:
>> I am estimating a difference in difference regression with stata...
>> and I would like to know what would be the best approach:
>> I estimate a difference in difference in levels: that is if my output
>> variable is Y, treated individuals have the dummy D=1 and treatment
>> period is in time T=2
>>
>> I run -reg Y T D T#D
>>
>> and the coefficient on T#D gives me the diff in diff estimates. But if
>> Y is a count variable... how could I say that Y decreased by X% after
>> the reform using the same approach?
>> Should I regress log(Y) instead of Y?
>
> You should not transform your dependent variable, instead you should
> use a link function. However, for a fully saturated model like you
> propose it just does not matter, either model gives you exactly the
> same predicted values. Here is a discusion in terms of a binary
> dependent variable:
> <http://www.stata.com/statalist/archive/2012-02/msg00351.html>, and
> here is an example in terms of a log link function:
>
> *------------------ begin example ------------------
> sysuse nlsw88, clear
> reg wage i.union##i.married
> predict yhat1
>
> poisson wage i.union##i.married
> predict yhat2
>
> assert yhat1 == yhat2
> *------------------- end example -------------------
> (For more on examples I sent to the Statalist see:
> http://www.maartenbuis.nl/example_faq )
>
> Hope this helps,
> Maarten
>
> ---------------------------------
> Maarten L. Buis
> WZB
> Reichpietschufer 50
> 10785 Berlin
> Germany
>
> http://www.maartenbuis.nl
> ---------------------------------
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