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Factorial Difference-in-Differences

Yiqing Xu, Anqi Zhao, Peng Ding

arXiv 16 Jul 2024 · Statistics — Methodology · 4 citations (OpenAlex)

arXiv:2407.11937 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We formulate factorial difference-in-differences (FDID) as a research design that extends the canonical difference-in-differences (DID) to settings without clean controls. Such situations often arise when researchers exploit cross-sectional variation in a baseline factor and temporal variation in an event affecting all units. In these applications, the exact estimand is often unspecified and justification for using the DID estimator is unclear. We formalize FDID by characterizing its data structure, target parameters, and identifying assumptions. Framing FDID as a factorial design with two factors -- the baseline factor G and the exposure level Z, we define effect modification and causal moderation as the associative and causal effects of G on the effect of Z. Under standard DID assumptions, including no anticipation and parallel trends, the DID estimator identifies effect modification but not causal moderation. To identify the latter, we propose an additional factorial parallel trends assumption. We also show that the canonical DID is a special case of FDID under an exclusion restriction. We extend the framework to conditionally valid assumptions and clarify regression-based implementations. We then discuss extensions to repeated cross-sectional data and continuous G. We illustrate the approach with an empirical example on the role of social capital in famine relief in China.

Citation extraction

28
references
48
in-text mentions
28
distinct cited
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main-text words

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Most heavily cited references

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.

ReferenceIntensityMentionsSectionsMain text
1Cao, J., Y. Xu, and C. Zhang (2022, June) (2022) Clans and calamity: How social capital saved lives during China's Great Famine1.00085100%
2Fouka, V (2019) How do immigrants respond to discrimination? The case of Germans in the US during World War I0.92843100%
3VanderWeele, T. J (2009) On the distinction between interaction and effect modification0.87452100%
4Bansak, K (2020) Estimating causal moderation effects with randomized treatments and non-randomized moderators0.81142100%
5Angrist, J. D. and J.-S. Pischke (2009) Mostly harmless econometrics: An empiricist’s companion0.64422100%
6Roth, J., P. H. Sant’Anna, A. Bilinski, and J. Poe (2023) What’s trending in difference-in-differences? a synthesis of the recent econometrics literature0.64422100%
7Holland, P. W. and D. B. Rubin (1986) Research designs and causal inferences: On Lord’s paradox0.51121100%
8Imbens, G. and D. B. Rubin (2015) Causal Inference for Statistics, Social, and Biomedical Sciences: An Introduction0.40511100%
9Squicciarini, M. P (2020) Devotion and development: Religiosity, education, and economic progress in Nineteenth-Century France0.40511100%
10Bertrand, M., E. Duflo, and S. Mullainathan (2004) How much should we trust differences-in-differences estimates?0.40511100%

Showing the top 10 of 28 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Triple Difference Designs with Heterogeneous Treatment Effects0.64422
2Causal Panel Analysis under Parallel Trends: Lessons from a Large Reanalysis Study0.40511
3Difference-in-Differences in the Presence of Unknown Interference0.40511