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The Power of the Synthetic Control Method
Dalarna University, School of Technology and Business Studies, Statistics.ORCID iD: 0000-0003-2317-9157
Dalarna University, School of Technology and Business Studies, Statistics.
2016 (English)Report (Other academic)
Abstract [en]

The synthetic control method (SCM) is a new, popular method developed for the purpose of estimating the effect of an intervention when only one single unit has been exposed. Other similar, unexposed units are combined into a synthetic control unit intended to mimic the evolution in the exposed unit, had it not been subject to exposure. As the inference relies on only a single observational unit, the statistical inferential issue is a challenge. In this paper, we examine the statistical properties of the estimator, study a number of features potentially yielding uncertainty in the estimator, discuss the rationale for statistical inference in relation to SCM, and provide a Web-app for researchers to aid in their decision of whether SCM is powerful for a specific case study. We conclude that SCM is powerful with a limited number of controls in the donor pool and a fairly short pre-intervention time period. This holds as long as the parameter of interest is a parametric specification of the intervention effect, and the duration of post-intervention period is reasonably long, and the fit of the synthetic control unit to the exposed unit in the pre-intervention period is good.

Place, publisher, year, edition, pages
Borlänge: Högskolan Dalarna, 2016. , 15 p.
Series
Working papers in transport, tourism, information technology and microdata analysis, ISSN 1650-5581 ; 2016:10
Keyword [en]
Bootstrap; Comparative case study; Counterfactual analysis; Intervention effect; Monte Carlo Simulation; Statistical Inference
National Category
Probability Theory and Statistics
Research subject
Complex Systems – Microdata Analysis, General Microdata Analysis - methods
Identifiers
URN: urn:nbn:se:du-23901OAI: oai:DiVA.org:du-23901DiVA: diva2:1061375
Funder
Swedish Retail and Wholesale Development Council
Available from: 2017-01-02 Created: 2017-01-02 Last updated: 2017-01-03Bibliographically approved

Open Access in DiVA

fulltext(637 kB)70 downloads
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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf