Damian Clarke - Estimating Difference-in-Differences in the Presence of Spillovers

Melbourne Institute Seminar Series

Melbourne Institute Seminar Room
Room 6.05, FBE Building
111 Barry St, Carlton


Title: Estimating Difference-in-Differences in the Presence of Spillovers

Abstract: I propose a method for difference-in-differences (DD) estimation in situations where the stable unit treatment value assumption is violated locally. This is relevant for a wide variety of cases where spillovers may occur between quasi-treatment and quasi-control areas in a (natural) experiment. A flexible methodology is described to test for such spillovers, and to consistently estimate treatment effects in their presence. This spillover-robust DD method results in two classes of estimands: treatment effects, and “close” to treatment effects. The methodology outlined describes a versatile and non-arbitrary procedure to determine the distance over which treatments propagate, where distance can be defined in many ways, including using multi-dimensional measures. This methodology is illustrated by simulation, and by its application to estimates of the impact of state-level text-messaging bans on fatal vehicle accidents. Extending existing DD estimates, I document that reforms travel over roads, and have spillover effects in neighbouring non-affected counties. Text messaging laws appear to continue to alter driving behaviour as much as 30 km outside of affected jurisdictions.

Presenter: Professor Damian Clarke, University of Santiago

The program coordinator of these seminars is Barbara Broadway. If you would like to subscribe to the Melbourne Institute Seminar Series email list, please contact Barbara.