FGV-EESP – MDPE Applied Microeconomics – 2/2023

Profs. Priscilla Tavares and Giovanni Di Pietra

Empirical Problem 3 – Regression Discontinuity Design

Theoretical Questions

Based on the content of CN 6 (Regression Discontinuity):

1. Use your own words to explain what is a “running” variable and how you can
use it to identify a causal effect in the context of regression discontinuity design.
What is the difference between a “sharp” and “fuzzy” RD design?

2. Write a sharp parametric regression discontinuity model using a polynomial of

order 1 and indicate which parameter will estimate the “RD” treatment effect.
Why is this model called a “local linear” regression?

3. Describe at least two strategies for checking the validity and robustness of RD
estimates. For each strategy, explain the potential threat it addresses and the
basic mechanics of how to perform the check. (Hint: You may want to read CN
6.3 Challenges to Identification).

In the context of Lee, Moretti, and Butler (2004) presented in CN 6.4 (Replicating a
Popular Design: The Close Election):
4. What is the paper's main research question (or doubt?)

5. What is the “running” variable in this RD design?

6. Interpret CN Figure 6.19 (or Lee, Moretti, and Butler (2004), Figure I) and CN
Table 6.11: (Results based on ADA Scores – Close election sample with linear
and quadratic). Do they provide evidence in favor of the authors “convergence”
or “divergence” hypothesis?
Practice Questions

Using the dataset provided for the "Close Election" design and the R package
rdrobust. For all estimates below, report the bias-corrected RD estimate and robust
standard errors clustered by "id".
7. Using a local linear regression, triangular weights, and MSE-optimal bandwidths
(h*), estimate the effect of close democrat win (using democrat vote share at
time t-1) on:
1. Future ADA (“score” at time t),
2. Contemporaneous ADA (“score” time t-1 or “score” at time t and democrat
vote share at time t),
3. “Incumbency” (that is, a democrat win at time t).
Provide graphs to illustrate your estimates.

8. Compare the 3 RD estimates from item 7 with alternative estimates using 2(h*)
as the bandwidth.

9. Plot McCrary (2008)'s density test using the “rdrobust” version and interpret
the test result.

10. Using a local linear regression, triangular weights and MSE-optimal bandwidths ,
estimate the RD effect of a close democrat win (using democrat vote share at
time t) on “Past ADA” (“score” at time t-1) and plot the RD graph. Interpret the
result. Why is this a robustness check?

Additional References
Cattaneo, M. D., Idrobo, N., & Titiunik, R. (2019). A practical introduction to
regression discontinuity designs: Foundations. Cambridge University Press.
https://mdcattaneo.github.io/books/Cattaneo-Idrobo-Titiunik_2020_CUP.pdf
Cattaneo, M. D., Idrobo, N., & Titiunik, R. (2023). A Practical Introduction to
Regression Discontinuity Designs: Extensions. Cambridge University Press, to appear.
https://mdcattaneo.github.io/books/Cattaneo-Idrobo-Titiunik_2023_CUP.pdf
Lee, David S., Enrico Moretti, and Matthew J. Butler. 2004. “Do Voters Affect or Elect
Policies: Evidence from the U.S. House.” Quarterly Journal of Economics 119 (3): 807–
59.
Button, P. (2018). A Replication of “Do Voters Affect or Elect Policies? Evidence from
the US House”(Quarterly Journal of Economics, 2004). Public Finance Review, 46(5),
886-893.