Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions

52 Pages Posted: 24 Sep 2015

See all articles by Andrew C. Eggers

Andrew C. Eggers

University of Oxford

Ronny Freier

German Institute for Economic Research (DIW Berlin)

Veronica Grembi

Sapienza University of Rome - Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks

Tommaso Nannicini

Bocconi University - Department of Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 2015

Abstract

In many countries, important features of municipal government (such as the electoral system, mayors' salaries, and the number of councillors) depend on whether the municipality is above or below arbitrary population thresholds. Several papers have used a regression discontinuity design (RDD) to measure the effects of these threshold-based policies on political and economic outcomes. Using evidence from France, Germany, and Italy, we highlight two common pitfalls that arise in exploiting population-based policies (confounded treatment and sorting) and we provide guidance for detecting and addressing these pitfalls. Even when these problems are present, population-threshold RDD may be the best available research design for studying the effects of certain policies and political institutions.

Keywords: regression discontinuity design, causal inference, sorting, population thresholds, institutional design

JEL Classification: H10, H19, H70, H77

Suggested Citation

Eggers, Andrew C. and Freier, Ronny and Grembi, Veronica and Nannicini, Tommaso, Regression Discontinuity Designs Based on Population Thresholds: Pitfalls and Solutions (September 2015). DIW Berlin Discussion Paper No. 1503, Available at SSRN: https://ssrn.com/abstract=2664464 or http://dx.doi.org/10.2139/ssrn.2664464

Andrew C. Eggers

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Ronny Freier (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Veronica Grembi

Sapienza University of Rome - Department of Earth Sciences and Forecasting Research Center, Prevention and Control of Geological Risks ( email )

Rome
Italy

Tommaso Nannicini

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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