Counterfactual Concepts

• counterfactual
  • what would have happened in the absence of a program
• counterfactual estimation
  • techniques to estimate a counterfactual that cannot be measured directly

Group Counterfactual

Statistical techniques can be used to compare a treatment group and a comparison group. The comparison group is also called a control group.

If these groups are chosen well, the individual differences will be averaged out. If the following requirements are met, we call this a valid comparison group.

• characteristics identical besides the program
• program should not directly or indirectly affect comparison group
• the outcomes in the comparison group should be the same as the treatment group

Counterfeit estimates of counterfactual

• before and after
  • other effects are not controlled for
• enrolled and nonenrolled groups
  • groups self-selecting could make outcome more likely

Common Techniques for Counterfactual Estimation

• Random assignment
• Regression discontinuity
• Difference in differences
• Matching or Matched Pairs