Sunday, February 14, 2016

Getting Kinky on Valentine's Day

We all know and love regression discontinuity (RD) designs. We use these to estimate the impact of a policy by comparing outcomes for people just below and just above a policy cutoff. Look here for some RD porn. Well now, there's a "kinkier" version of this becoming more and more popular: the regression kink design (RKD). A really nice description is available here, but let me quote the basic idea:

"The regression discontinuity design exploits a jump or discontinuity in the likelihood of being treated at some threshold point. In the RKD design, there is instead a change in slope at the likelihood of being treated at a kink point, resulting in a discontinuity in the first-derivative of the assignment function...For example, Simonsen et al. (2015) use a kink in the Danish government’s prescription drug reimbursement schedule: the subsidy is based on the total prescription costs the individual has paid during the year – there is 0% subsidy for the first 500 DKK in expenses, then 50% subsidy once you have paid 500 up until you have paid 1200, then 75% subsidy, and eventually an 80% subsidy for expenses above 2800 DKK. The result is that the share of the price paid out of pocket kinks as shown in Figure 1:


Figure 1: Y-axis is the share of the price paid out of pocket. It falls as one approaches 500 DKK since if you have spent 480 and buy something for 50, you get 0% subsidy on 20 DKK and then 50% subsidy on the 30 DKK that is expenditure past the threshold."


I have seen this strategy used for estimating the impact of unemployment insurance payments in the US as well. I'm sure there are many other public policies that can be analyzed using RKD. In honor of Valentine's Day, I suggest you go off to find them!  ;)  

Friday, February 12, 2016

STATA Now Sends Txt Messages

I often joke that STATA is the true love of my life. Always there for me. Night and day, year after year. People sometimes respond that STATA can't bring soup when I'm sick, blah, blah.

Well, unfortunately STATA still can't cook for me, but the good news is that it now sends txt messages. Directly to my phone! :)

This module, developed by a Yale graduate student, will send a message to your phone as soon as your program finishes running. Now you can feel free to leave your desk for a bit--maybe do some laundry, maybe make some soup. STATA will let you know when it's ready for you again. LOVE!  

Sunday, February 7, 2016

"It is not in the stars to hold our destiny but in ourselves."

That's a Shakespeare quote. Not sure if this is exactly what he had in mind, but I think it's a great reminder not to get so crazy over small p values that you forget to think about the actual coefficient estimates. Look at the numbers! Do they make sense? Are they believable? Of course, the best case scenario is that the coefficient estimate makes sense and there are a bunch of stars next to it, but when that doesn't happen, read this. Whatever you do, don't stand up in front of reasonably smart people and try to convince them that some crazy, unbelievably big estimate is the right one just because you used an IV. Chances are that the "too big to be believable" estimate is a direct result of using a bad IV.

For now, let me leave with you another quote...