Oh yes, another post about RD design. I've actually been meaning to blog about this for a while, but I just haven't gotten to it. So, we all know the basic idea behind regression discontinuity. We want to control for smooth function of the forcing variable, and then check if there is a discontinuity at the cutoff. The tricky thing: how to control for the forcing variable given that we don't really know the true relationship. There are basically two potential techniques. It turns out, however, that one is way better than the other. For intuition on the two techniques along with an explanation of why one is way better than the other, click here. For the most recent draft of the paper, click here. For the NBER version, here.
And how about a really cool example of a paper using spatial regression discontinuity? Click here.
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