arXiv 31 Jul 2023 · Econometrics · 11 citations (OpenAlex)
arXiv:2308.00167 · PDF · DOI · OpenAlex · Extracted main text
The log transformation of the dependent variable is not innocuous when using a difference-in-differences (DD) model. With a dependent variable in logs, the DD term captures an approximation of the proportional difference in growth rates across groups. As I show with both simulations and two empirical examples, if the baseline outcome distributions are sufficiently different across groups, the DD parameter for a log-specification can be different in sign to that of a levels-specification. I provide a condition, based on (i) the aggregate time effect, and (ii) the difference in relative baseline outcome means, for when the sign-switch will occur.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Emanuele Ciani and Paul Fisher Dif-in-dif estimators of multiplicative treatment effects | 0.843 | 3 | 3 | 100% |
| 2 | Bruce D. Meyer (1995) Natural and quasi-experiments in economics | 0.811 | 4 | 2 | 100% |
| 3 | Ariella Kahn-Lang and Kevin Lang (2020) The promise and pitfalls of differences-in-differences: Reflections on 16 and pregnant and other applications | 0.737 | 3 | 2 | 100% |
| 4 | Jonathan Roth and Pedro H. C. Sant'Anna (2023) When is parallel trends sensitive to functional form? | 0.737 | 3 | 2 | 100% |
| 5 | Joshua D Angrist and Jörn-Steffen Pischke (2009) Mostly harmless econometrics: An empiricist's companion | 0.405 | 1 | 1 | 100% |
| 6 | H. Spencer Banzhaf (2021) Difference-in-differences hedonics | 0.405 | 1 | 1 | 100% |
| 7 | Marc F. Bellemare and Casey J. Wichman (2020) Elasticities and the inverse hyperbolic sine transformation | 0.405 | 1 | 1 | 100% |
| 8 | Kelly C. Bishop, Nicolai V. Kuminoff, H. Spencer Banzhaf, Kevin J. B… (2020) Best practices for using hedonic property value models to measure willingness to pay for environmental quality | 0.405 | 1 | 1 | 100% |
| 9 | Amy Finkelstein (2007) The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare* | 0.405 | 1 | 1 | 100% |
| 10 | Andrew Goodman-Bacon (2021) Difference-in-differences with variation in treatment timing | 0.405 | 1 | 1 | 100% |
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