Supporting Parallel Trends (The Effect, Videos on Causality, Ep 54)

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The Effect is a book about research design and causal inference. How can we use data to learn about the world? How can we answer questions about whether X causes Y even if we can't run a randomized experiment? The book covers these things and plenty more. These videos are meant to accompany the book, although they can also be viewed on their own.

This video relates to material found in Chapter 18 of the book.

Parallel trends is a key assumption in doing a difference-in-differences analysis. How can we use data to check whether that assumption is plausible and can be trusted? This video goes through a few different ways.
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Thank you for the good video. I have a question.
In your model Y=intercept+ß1*Time++ß2*Time * Group + E. We have to test wheter ß2 is different from zero.
But how about a model in following set-up.
Y = intercept + ß1 * Group + ß2 * Time + ß3 * Group * Time + E.
Do I have to test (for parallel trend assumption), if ß1 differs from zero for the pre period?
I am a bit confused because to my understanding ß1 depicts the effect of an observation being part of the treatment group and if it differs from zero, than there are (significant) differences and PTA doesn´t hold. Am I rigth?
Very best regards!

schafer
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Great video! Just had a question as to why we're only adding the group fixed effects when testing the parallel trends assumption and not year fixed effects as well, thanks!

samarth