Did double difference method

Double difference method, English name Differences-in-Differences, abbreviated as DID, is also called double difference method, even teacher Yu Jun is also called double difference method. As a sharp weapon of policy evaluation, DID has been a star in academic circles in recent years. Everyone will go through the top journals at home and abroad, and basically there will be DID papers in each issue. It seems impossible to use OLS and FE to expand the material now, because the method is too simple and may not conform to the "temperament" of the journal, while DID sounds high-end (although it is an interactive project) and can satisfy the vanity of the author and editor.

Double-difference method, also called double-difference method, is used to evaluate the policy effect, because the principle and model of double-difference method are very easy to understand. So it is loved by many people. The essence of double-difference method is the fixed effect of panel data, so if only panel data is needed, double-difference method cannot be used, only cross-sectional data is needed.

DID model includes individual and grouped virtual variables. If individuals are affected by policy implementation, the dummy variable of grouping is1; Otherwise, the dummy variable of grouping will take 0, which can reflect the net effect of policy implementation. In the double-difference model, it takes at least two years of panel data set to correctly reflect the effect of policy implementation.

Double difference method is a very effective method to evaluate the effect of policy implementation, which is widely used in microeconomics.