Empirical Methods
Slides [link]Key Points
- Lecture 1: Translating policy problems into empirical questions
- Lecture 2: Correlation vs causation
- Correlated explanatory variables and omitted variables
- Lecture 3: Experiments
- Example: Time varying electricity prices.
- Lectures 4/5: Natural experiments
- Theory
- Difference-in-Differences and panel regression
- Example: Nuclear plant privatization
Required reading and response questions
Lecture 1
Required reading
- Read “Why Are Energy Prices So High? Some Experts Blame Deregulation” NY Times
- Then read sections 1-3 of Borenstein and Bushnell (2015). “The US Electricity Industry After 20 Years of Restructuring.” Annual Review of Economics 7 (1): 437–63. link. Alternative BC link here.
Response questions:
- What are some hypotheses about deregulation and electricity prices posed in the NY Times article?
- Borenstein and Bushnell look for empirical evidence that electricity deregulation reduced costs. Describe their statistical approach to answering this question (in your own words). Name one complicating factor involved in this exercise, as described by the authors.
Lecture 2
No required readings. Blog post 1 due.
Optional reading: “Quasi-Experimental and Experimental Approaches to Environmental Economics” by Greenstone and Gayer (ungated version here)
Lecture 3
Required reading
- Read Jessoe and Rapson (AER 2014)
- Optional: There are actually dozens of experiments like this. See this review for a synthesis.
Response questions: Explain the experimental setup in your own words (1-2 sentences each)
- What is the research question?
- Why do the authors need to use an experiment to answer it?
- What are the different experimental groups?
Lecture 4
Required reading
- Read the 2021 Nobel Prize Award Summary
Response questions:
- What is a “natural experiment”?
- How did Card and Krueger estimate the effect of the minimum wage on employment?
Lecture 5
Required reading
- Read “Deregulation, Consolidation, and Efficiency: Evidence from US Nuclear Power,” Lucas W. Davis and Catherine Wolfram (ungated version here)
Response questions:
- The authors are using using “difference-in-differences” here. What are the two differences? Explain the groups being compared in your own words.
- Do you find this empirical approach believable? Why or why not?
- Optional: “Environmental Health Risks and Housing Values: Evidence from 1600 Toxic Plant Openings and Closings”, by Currie et al (ungated version here)