Suppose you have two departments and have daily data on complaints and number of products they oversee for the departments over two years. In the second year, you increased the number of products under the scope of department #2 by 10. To estimate the effect of this increase in the number of products, you estimate the following regression: Complaints_it = α + β₁ × Department #2_it + β₂ × Year2_it + β₃ × Department #2_it × Year2_it + U_it. In this regression, what is the "diff-in-diff"? A) α + β₁ B) β₁ + β₃ C) α + β₃ D) β₃

Question

Quizplus · Accepted Answer

The "diff-in-diff" estimate is captured by the coefficient of the interaction term between the treatment group (Department #2) and the post-treatment period (Year2), which is β13 in the given regression equation. This coefficient measures the differential effect of the treatment on the treated group over time, relative to the control group.

Suppose You Have Two Departments and Have Daily Data on Complaints