Difference in differences (sometimes 'differences-in-differences', 'DID', or 'DD') is a quasi-experimental technique used in econometrics that measures the effect of a treatment at a given period in time. It is often used to measure the change induced by a particular treatment or event, though it may be subject to certain biases (mean reversion bias, etc.). In contrast to a within-subjects estimate of the treatment effect (that measures the difference in an outcome after and before treatment) or a between-subjects estimate of the treatment effect (that measures the difference in an outcome between the treatment and control groups), the DID estimator represents the difference between the pre-post, within-subjects differences of the treatment and control groups.
The basic premise of DID is to examine the effect of some sort of treatment by comparing the treatment group after treatment both to the treatment group before treatment and to some other control group. Naively, you might consider simply looking at the treatment group before and after treatment to try to deduce the effect of the treatment. However, a lot of other things were surely going on at exactly the same time as the treatment. DID uses a control group to subtract out other changes at the same time, assuming that these other changes were identical between the treatment and control groups. (The Achilles' heel of DID is when something else changes between the two groups at the same time as the treatment.) For it to be an accurate estimation, we must also assume that the composition of the two groups remains the same over the course of the treatment. Also we need to consider the possible serial correlation issues.
Read more about Difference In Differences: Hypothetical Example, Real Example, Critics
Famous quotes containing the words difference and/or differences:
“The sadistic person is as dependent on the submissive person as the latter is on the former; neither can live without the other. The difference is only that the sadistic person commands, exploits, hurts, humiliates, and that the masochistic person is commanded, exploited, hurt, humiliated. This is a considerable difference in a realistic sense; in a deeper emotional sense, the difference is not so great as that which they both have in common: fusion without integrity.”
—Erich Fromm (1900–1980)
“I may be able to spot arrowheads on the desert but a refrigerator is a jungle in which I am easily lost. My wife, however, will unerringly point out that the cheese or the leftover roast is hiding right in front of my eyes. Hundreds of such experiences convince me that men and women often inhabit quite different visual worlds. These are differences which cannot be attributed to variations in visual acuity. Man and women simply have learned to use their eyes in very different ways.”
—Edward T. Hall (b. 1914)