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I'm not an economist, but when I once asked examples of good econometric methods to study especially related to synthetic control. I was given just that Marine

I'm not an economist, but when I once asked examples of good econometric methods to study especially related to synthetic control. I was given just that Marinescu's Alaska paper you are referring to. They needed a counterfactual for exactly one state. They create "synthetic Alaska" elsewhere in in the United states to make the comparison valid. Even if the researchers did not intent it that way, the selection methodology selected areas in the continental US that have geographic featurs similar to Alaska. It's really fine paper and good methodology. Another fine point about basic income in the paper is that it makes difference between tradeable businesses (can be are exported) and non-tradable businesses (stays local). Employment rates in non-tradeable business don't change. By contrast part-time work did increase, and employment fell in companies that sold goods outside Alaska (this has implications for wider applicability I guess).

pacbard 8y ago
I think that the original synthetic control paper is this paper by Abadie and colleagues[1]. Figure 1 and 2 give you the intuition behind the need of using the a synthetic control rather than compare California to the rest of the US. You can notice figure 1 that California’s sales of tobacco products was decreasing before the prop 99 and that this trend is different than the rest of the US. This violates the required parallel trends assumption that is required to have an unbiased estimate in a DD model. Abadie et al. reweight the results from the other states to create a synthetic comparison group. This gives them a synthetic California sample that is similar to pre-prop 99 California. You can see that in figure 2. They claim that any deviation from this synthetic group is due to the effects of prop 99 on tobacco sales (Do you believe them? This paper’s conclusion rests on your answer to this question.). Bonus: Figure 3 shows the normalized results. I always appreciate Econ papers that put their results in a graph. Tables are hard to read sometimes. [1]: https://economics.mit.edu/files/11859 https://economics.mit.edu/files/11859

pacbard 8y ago

I think that the original synthetic control paper is this paper by Abadie and colleagues[1]. Figure 1 and 2 give you the intuition behind the need of using the a synthetic control rather than compare California to the rest of the US. You can notice figure 1 that California’s sales of tobacco products was decreasing before the prop 99 and that this trend is different than the rest of the US. This violates the required parallel trends assumption that is required to have an unbiased estimate in a DD model. Abadie et al. reweight the results from the other states to create a synthetic comparison group. This gives them a synthetic California sample that is similar to pre-prop 99 California. You can see that in figure 2. They claim that any deviation from this synthetic group is due to the effects of prop 99 on tobacco sales (Do you believe them? This paper’s conclusion rests on your answer to this question.). Bonus: Figure 3 shows the normalized results. I always appreciate Econ papers that put their results in a graph. Tables are hard to read sometimes. [1]: https://economics.mit.edu/files/11859 https://economics.mit.edu/files/11859