Reusing Natural Experiments
Charles A. Dice Center Working Paper No. 2019-21
69 Pages Posted: 21 Sep 2019 Last revised: 11 Aug 2021
Date Written: August 7, 2021
After a natural experiment is first used, other researchers often reuse the setting, examining different outcome variables. We use simulations based on real data to illustrate the multiple hypothesis testing problem that arises when researchers reuse natural experiments. We then provide guidance for future inference based on popular empirical settings including difference-in-differences regressions, instrumental variables regressions, and regression discontinuity designs. When we apply our guidance to two extensively studied natural experiments, business combination laws and the Regulation SHO pilot, we find that many results that were statistically significant using single hypothesis testing do not survive corrections for multiple hypothesis testing.
Keywords: False Positive, Identification, Multiple Hypothesis Testing, Natural Experiments
JEL Classification: G1, G10
Suggested Citation: Suggested Citation