Jörn-Ste¤en Pischke
LSE
1 if Xi X0
Di = .
0 if Xi < X0
1.6
1.4
1.2
Outcome
1
.8
.6
0 .2 .4 .6 .8 1
X
Y 0i = f ( Xi ) + e i
Y 1i = Y 0i + β
Yi = f (Xi ) + βDi + ei
= f (Xi ) + β1(Xi X0 ) + e i .
Flexible enough to get the functional form of E [Y0i jXi ] right away
from X0 .
Look at the picture to see how much ‡exibility you need.
Make the window of your data around X0 smaller and stick with linear.
RD only provides local information on treatment at X0 .
You need a lot of data near X0 for this.
Try a few di¤erent windows.
Data dependent window choice: G. Imbens and K. Kalyanaraman
“Optimal bandwidth choice for the regression discontinuity
estimator,” Review of Economic Studies (2012)
We can allow for di¤erent functions to the left and the right of the cuto¤:
Need to impose fl (X0 ) = fr (X0 ). For a linear function for f (Xi ) this
amounts to
2
1.5
Outcome
1
.5
0
0 .2 .4 .6 .8 1
x
1.5
1
Density
.5
0
0 .2 .4 .6 .8 1
x
1.5
1
Density
.5
0
0 .2 .4 .6 .8 1
x
Pr(Di
= 1 ) = p ( Xi )
lim p (Xi ) 6= lim p (Xi ).
X i "X 0 X i #X 0
1 if Xi X0
p ( Xi ) = .
0 if Xi < X0