TY - JOUR
T1 - Difference in Differences, Ratio in Ratios, and Ratio in Odds Ratios for Limited Dependent Variables
T2 - A Review and More
AU - Lee, Sanghyeok
AU - Lee, Myoung Jae
N1 - Publisher Copyright:
© 2025 the author(s), published by De Gruyter, Berlin/Boston.
PY - 2025
Y1 - 2025
N2 - Difference in differences (DD) is widely used to find policy/treatment effects with observational data, but applying DD to limited dependent variables (LDV's) Y has been problematic. This paper addresses how to apply DD and related approaches, such as "ratio in ratios"and "ratio in odds ratios", to LDV's under the unifying framework of 'generalized linear models with link functions'. We review and evaluate DD and the related approaches with simulation and empirical studies, and recommend 'Poisson Quasi-MLE' for non-negative (such as count or zero-censored) Y and (multinomial) logit MLE for binary, fractional or multinomial Y.
AB - Difference in differences (DD) is widely used to find policy/treatment effects with observational data, but applying DD to limited dependent variables (LDV's) Y has been problematic. This paper addresses how to apply DD and related approaches, such as "ratio in ratios"and "ratio in odds ratios", to LDV's under the unifying framework of 'generalized linear models with link functions'. We review and evaluate DD and the related approaches with simulation and empirical studies, and recommend 'Poisson Quasi-MLE' for non-negative (such as count or zero-censored) Y and (multinomial) logit MLE for binary, fractional or multinomial Y.
KW - difference in differences
KW - limited dependent variable
KW - ratio in odds ratios
KW - ratio in ratios
UR - https://www.scopus.com/pages/publications/105013775128
U2 - 10.1515/snde-2024-0125
DO - 10.1515/snde-2024-0125
M3 - Review article
AN - SCOPUS:105013775128
SN - 1081-1826
JO - Studies in Nonlinear Dynamics and Econometrics
JF - Studies in Nonlinear Dynamics and Econometrics
ER -