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Difference in differences

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Difference in differences (DiD or DD) is a quasi-experimentalstatistical technique used in econometrics and quantitative research in the social sciences that attempts to mimic an experimental research design using observational study data by studying the differential effect of a treatment on a "treatment group" versus a "control group" in a natural experiment.

Quasi-experimentQuasi-experimentA quasi-experiment is a research design used to estimate the causal impact of an intervention. This research design is aimed at assessing the difference between outcomes (e.g., reading knowledge, depressive symptoms) in a group that experienced an intervention and a group that did not.EconometricsEconometricsEconometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. More precisely, it is "the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference." An introductory economics textbook describes econometrics as allowing economists "to sift through mountains of data to extract simple relationships."Treatment and control groupsIn the design of experiments, hypotheses are applied to experimental units in a treatment group. In comparative experiments, members of a control group receive a standard treatment, a placebo, or no treatment at all. There may be more than one treatment group, more than one control group, or both.Observational studyObservational studyIn fields such as epidemiology, social sciences, psychology and statistics, an observational study draws conclusions without controlling the independent variable due to ethical or practical limitations. One common example studies the effect of a treatment, where the researcher does not assign subjects to treatment or control group.ExperimentExperimentAn experiment is a procedure carried out to support or refute a hypothesis, or determine the efficacy or likelihood of something previously untried. Experiments provide insight into cause-and-effect by demonstrating what outcome occurs when a particular factor is manipulated. Experiments vary greatly in goal and scale but always rely on repeatable procedure and logical analysis of the results. There also exist natural experimental studies.Dependent and independent variablesDependent and independent variablesA variable is considered dependent if it depends on (or is hypothesized to depend on) an independent variable. Dependent variables are the outcome of the test they depend on, by some law or rule (e.g., by a mathematical function). Independent variables, on the other hand, are not seen as depending on any other variable in the scope of the experiment in question. Rather, they are controlled by the experimenter.Natural experimentNatural experimentA natural experiment is a study in which individuals are exposed to experimental and control conditions that are determined by nature or by other factors outside the control of the investigators. The exposure process may resemble random assignment. Thus, natural experiments are observational studies and are not controlled in the traditional sense of a randomized experiment (an intervention study).StatisticsStatisticsStatistics (from German: Statistik, orig. "description of a state, a country") is the discipline that concerns the collection, organization, analysis, interpretation, and presentation of data. In applying statistics to a scientific, industrial, or social problem, it is conventional to begin with a statistical population or a statistical model to be studied.Selection biasSelection biasSelection bias is the bias introduced by the selection of individuals, groups, or data for analysis in such a way that the association between exposure and outcome among those selected for analysis differs from the association among those eligible. It typically occurs when researchers condition on a factor that is influenced both by the exposure and the outcome (or their causes), creating a false association between them.Quantitative researchQuantitative researchQuantitative research is a research strategy that focuses on quantifying the collection and analysis of data. It is formed from a deductive approach where emphasis is placed on the testing of theory, shaped by empiricist and positivist philosophies. Associated with the natural, applied, formal, and social sciences this research strategy promotes the objectiveempirical investigation of observable phenomena to test and understand relationships.Regression toward the meanRegression toward the meanIn statistics, regression toward the mean (also called regression to the mean, reversion to the mean, and reversion to mediocrity) is the phenomenon where if one sample of a random variable is extreme, the next sampling of the same random variable is likely to be closer to its mean.

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