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Difference-in-difference

Fri, 08/01/2008 - 11:36 — Cristina Sette

The following text is drawn from the World Bank's website.

Difference-in-difference

The difference in a given outcome between recipients of the project (the treatment group) and a comparison or control group is computed before the project is implemented. This difference is called the “first difference”. The difference in outcomes between treatment and control groups is again computed some time after the project is implemented, and this is called the “second difference”. Under the difference-in-difference technique, the impact of the project is the second difference less the first difference. The logic is that the impact of the project is the difference in outcomes for treatment and control groups after the project is implemented, net of any pre-existing differences in outcomes between treatment and control groups that pre-date the project.

Source: The World Bank http://go.worldbank.org/J35S3J8B60

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