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| title | chunk | source | category | tags | date_saved | instance |
|---|---|---|---|---|---|---|
| Difference in differences | 4/4 | https://en.wikipedia.org/wiki/Difference_in_differences | reference | science, encyclopedia | 2026-05-05T09:50:03.034225+00:00 | kb-cron |
=== In economic history === Difference-in-differences has also been applied to the study of historical events, particularly in the field of economic history, where researchers rely on natural experiments to investigate long-run outcomes. By comparing regions or groups that were differentially exposed to shocks such as disease, institutional change, or wartime destruction, scholars have used the method to identify causal effects that cannot be observed directly. In 2021, Elena Esposito used DID to examine how the arrival of malaria influenced the expansion of African slavery in the United States. She compared counties that were more ecologically suitable for malaria transmission with those that were less suitable, before and after the introduction of the disease in the late seventeenth century. Results showed that malaria-prone counties experienced a much greater increase in the share of enslaved Africans after the disease became endemic. In addition, enslaved individuals from parts of Africa with high malaria prevalence sold at higher prices in Louisiana slave markets, suggesting that buyers placed a premium on resistance to malaria. This application demonstrated how DID can be used to link environmental shocks with institutional development over the long run. González, Marshall, and Naidu in 2017 used DID to analyze how the abolition of slavery in Maryland affected patterns of entrepreneurship. They combined census data with contemporary credit reports to compare business formation by slaveowners and non-slaveowners before and after the uncompensated abolition of slavery in 1864. They found that slaveowners were more likely to start businesses before emancipation, but this advantage disappeared once slavery was abolished.In this case, DID made it possible to treat emancipation as a sudden institutional change and to see how it affected business activity. In 2022, James Feigenbaum, James Lee, and Filippo Mezzanotti used DID to measure the economic effects of General Sherman’s March during the American Civil War. Using county-level data from 1850 to 1920, they compared areas directly in the path of the march with nearby counties that were spared. Their findings showed large and immediate declines in farm values, agricultural investment, and manufacturing activity in the affected counties. While manufacturing output eventually recovered by the late nineteenth century, agricultural effects lasted for decades, with lower levels of improved farmland still evident in 1920. The study also showed that the lack of credit and the collapse of banks after the Civil War slowed down the recovery, especially in places that relied more on borrowing. Overall, the study used DID to demonstrate that conflict had lasting effects on the economy and local institutions. In 2012, Richard Hornbeck used DID to study the long-term economic consequences of the American Dust Bowl of the 1930s. He compared counties that experienced severe soil erosion with nearby counties that were less affected, before and after the disaster. His findings show that heavily eroded counties suffered persistent declines in land values and agricultural revenues of 20 to 30 percent, with little recovery even 10 years later. Many residents migrated away as a result, and population decline became the primary adjustment. This work demonstrates how DID can be applied to environmental shocks in economic history, pointing out the long run effects of ecological disasters on regional development.
== See also == Design of experiments Average treatment effect Synthetic control method
== References ==
== Further reading == Angrist, J. D.; Pischke, J. S. (2008). Mostly Harmless Econometrics: An Empiricist's Companion. Princeton University Press. pp. 227–243. ISBN 978-0-691-12034-8. Andrew Baker, Brantly Callaway, Scott Cunningham, Andrew Goodman-Bacon and Pedro H. C. Sant'Anna. 2025. "Difference-in-Differences Designs: A Practitioner’s Guide." Journal of Economic Literature. Cameron, Arthur C.; Trivedi, Pravin K. (2005). Microeconometrics: Methods and Applications. Cambridge university press. pp. 768–772. doi:10.1017/CBO9780511811241. ISBN 9780521848053. S2CID 120313863. Imbens, Guido W.; Wooldridge, Jeffrey M. (2009). "Recent Developments in the Econometrics of Program Evaluation". Journal of Economic Literature. 47 (1): 5–86. doi:10.1257/jel.47.1.5. Bakija, Jon; Heim, Bradley (August 2008). "How Does Charitable Giving Respond to Incentives and Income? Dynamic Panel Estimates Accounting for Predictable Changes in Taxation". NBER Working Paper No. 14237. doi:10.3386/w14237. Conley, T.; Taber, C. (July 2005). "Inference with 'Difference in Differences' with a Small Number of Policy Changes". NBER Technical Working Paper No. 312. doi:10.3386/t0312.
== External links == Difference in Difference Estimation, Healthcare Economist website