When might it be the case that a difference-in-differences estimator still does not identify a consistent estimate of the causal treatment effect?
A) If the treatment is non-normally distributed.
B) If there are non-time varying effects that generate differences between treated and non-treated groups.
C) If there are time varying effects that generate amongst both treated and non-treated groups symmetrically.
D) If there are time-varying trends that are different amongst treated and non-treated groups.

Question

Quizplus · Accepted Answer

If there are time-varying trends that are different amongst treated and non-treated groups, the difference-in-differences estimator may not identify a consistent estimate of the causal treatment effect. This is because the estimator relies on the assumption that the trends in the outcome variable would have been the same in the absence of the treatment, which is violated if there are differential time-varying trends.

When Might It Be the Case That a Difference-In-Differences Estimator