We begin with two introductory chapters. The first describes the type of research agenda for which the material in subsequent chapters is most likely to be useful. The second discusses the sense in which experiments, i. e., randomized trials of the sort used in medical research, provide an ideal benchmark for the questions we find most interesting. After this introduction, the three chapters of Part II present core material on regression, instrumental variables, and differences-in-differences. These chapters emphasize both the universal properties of the relevant estimators (e. g...Read More
Category Mostly Harmless Econometrics: An Empiricist’s Companion
We often discuss regression models using terms like saturated and main effects. These terms originate in an experimentalist tradition that uses regression to model discrete treatment-type variables. This language is now used more widely in many fields, however, including applied econometrics. For readers unfamiliar with these terms, this section provides a brief review.
Saturated regression models are regression models with discrete explanatory variables, where the model includes a separate parameter for all possible values taken on by the explanatory variables. For example, when working with a single explanatory variable indicating whether a worker is a college graduate, the model is saturated by including a single dummy for college graduates and a constant...Read More
‘I checked it very thoroughly,’ said the computer, ‘and that quite definitely is the answer. I think the problem, to be quite honest with you, is that you’ve never actually known what the question is.’
Douglas Adams, The Hitchhiker’s Guide to the Galaxy (1979)
Many econometrics courses are concerned with the details of empirical research, taking the choice of topic as given. But a coherent, interesting, and doable research agenda is the solid foundation on which useful statistical analyses are built. Good econometrics cannot save a shaky research agenda, but the promiscuous use of fancy econometric techniques sometimes brings down a good one. This chapter briefly discusses the basis for a successful research project...Read More