In a difference‐in‐difference framework, the parallel trends assumption means that

In a difference‐in‐difference framework, the parallel trends assumption means that

A. The treatment and control groups look similar in the pre‐treatment period.
B. The treatment and control groups look similar in the post‐treatment period.
C. The treatment and control groups look similar in both periods.
D. The difference between the treatment and control groups in the post‐period would have been the same as in the pre‐period if not for the treatment.


Answer: D. The difference between the treatment and control groups in the post-period would have been the same as in the pre-period if not for the treatment.

To estimate the impact of state income taxes on labor supply, a researcher runs a regression of labor force participation rates on tax rates, controlling for state and year fixed effects. She concludes that higher taxes lower labor supply. What might be a valid objection to her conclusion, given her empirical approach?

To estimate the impact of state income taxes on labor supply, a researcher runs a regression of labor force participation rates on tax rates, controlling for state and year fixed effects. She concludes that higher taxes lower labor supply. What might be a valid objection to her conclusion, given her empirical approach?

A. States that raise taxes have more liberal voters than states that do not raise taxes.
B. States often raise taxes at the same time as each other.
C. States raise taxes more when their local labor force participation is low, making it harder to balance their budgets.
D. States raise taxes more when their local labor force participation is high, when voters are well‐employed and thus more willing to support public projects.


Answer: D. States raise taxes more when their local economies are doing well, when voters are well-employed and thus more willing to support public projects.

To estimate the impact of attending pre‐school on the probability of attending college, a researcher proposes to use a sibling fixed effects approach. Which of the following sources of omitted variable does this eliminate?

To estimate the impact of attending pre‐school on the probability of attending college, a researcher proposes to use a sibling fixed effects approach. Which of the following sources of omitted variable does this eliminate?

A. Children who attend pre‐school are from more educated families than children who do not.
B. Families send children to pre‐school only if those children are healthy.
C. Families send children to pre‐school when the economy is doing well.
D. None of the above.


Answer: A. Children who attend pre-school are from more educated families than children who do not.

In an instrumental variables study, the first stage regression tests whether

In an instrumental variables study, the first stage regression tests whether

A. The instrument (Z) is related to the treatment variable (X).
B. The instrument (Z) is related to the outcome (Y).
C. The treatment variable (X) is related to the outcome (Y).
D. The instrument is exogenous.


Answer: A. The instrument (Z) is related to the treatment variable (X).

To evaluate the impact of family income on child outcomes, a researcher proposes to use maternal (mother's) education as an instrumental variable for family income. A critic argues that this instrumental variable isn't exogenous, claiming that

To evaluate the impact of family income on child outcomes, a researcher proposes to use maternal (mother's) education as an instrumental variable for family income. A critic argues that this instrumental variable isn't exogenous, claiming that

A. Maternal education is not strongly related to family income.
B. Maternal education is not strongly related to child outcomes.
C. Family income may affect child outcomes for many reasons.
D. Maternal education may affect child outcomes through channels other than family income.


Answer: D. Maternal education may affect child outcomes through channels other than family income.

A randomized trial finds that treatment and control group patients taking a new drug had similar cholesterol levels after one year. The drug was thus deemed ineffective. Patients who died during the trial could not have their cholesterol measured. A critic argues that the drug is successful but that this form of attrition has biased the results. Which of these facts would best support his argument?

A randomized trial finds that treatment and control group patients taking a new drug had similar cholesterol levels after one year. The drug was thus deemed ineffective. Patients who died during the trial could not have their cholesterol measured. A critic argues that the drug is successful but that this form of attrition has biased the results. Which of these facts would best support his argument?

A. Many patients in the treatment and control groups died during the trial.
B. Many patients with particularly high cholesterol in the treatment and control groups died during the trial.
C. More patients with high cholesterol died in the treatment group than in the control group.
D. More patients with high cholesterol died in the control group than in the treatment group.


Answer: D. More patients with high cholesterol died in the control group than in the treatment group.

We randomly select half of econometrics students to attend extra office hours with a faculty member. At the end of the semester, we find no evidence that this affects the final exam scores. The Dean argues that this means faculty members are ineffective teachers. I argue that spillover effects led to these small estimates because.

We randomly select half of econometrics students to attend extra office hours with a faculty member. At the end of the semester, we find no evidence that this affects the final exam scores. The Dean argues that this means faculty members are ineffective teachers. I argue that spillover effects led to these small estimates because.

A. Students who attended the extra office hours passed their knowledge onto others.
B. Not everyone who was selected to attend the extra office hours did so.
C. Some people who were not selected nonetheless demanded and received extra office hours.
D. We screwed up the randomization and were more likely to give extra office hours to students with lower midterm grades.


Answer: A. Students who attended the extra office hours passed their knowledge onto others.

A researcher wants to know if the association between education and life expectancy varies by gender. Which is the simplest regression that can help answer this question?

A researcher wants to know if the association between education and life expectancy varies by gender. Which is the simplest regression that can help answer this question?

A. LifeExpectancy = B0 + B1*female + E
B. LifeExpectancy = B0 + B1*educ+ E
C. LifeExpectancy = B0 + B1female + B2Educ + E
D. LifeExpectancy = B0 + B1female + B2Educ + B3femaleeduc + E


Answer: D. LifeExpectancy = B0 + B1female + B2Educ + B3femaleeduc + E

You estimate the following relationship between a house's price and its number of bedrooms: log price_hat = 12 + .3*bedrooms How would interpret the coefficient on bedrooms?

You estimate the following relationship between a house's price and its number of bedrooms:
log price_hat = 12 + .3*bedrooms
How would interpret the coefficient on bedrooms?

A. Each additional bedroom is associated with a 0.3 percent increase in price.
B. Each additional bedroom is associated with a 30 percent increase in price.
C. Each additional bedroom is associated with a 30 percentage point increase in price.
D.Need more information on the units of the price variable.


Answer: B. Each additional bedroom is associated with a 30 percent increase in price.

A researcher estimates the following quadratic relationship between daily earnings (in dollars) and years of education: earnings_hat = 36 + 8education + 2education^2 What is the estimated increase in earnings associated with moving from 9 to 10 years of education?

A researcher estimates the following quadratic relationship between daily earnings (in dollars) and years of education:
earnings_hat = 36 + 8education + 2education^2
What is the estimated increase in earnings associated with moving from 9 to 10 years of education?

A. $8 per day
B. $10 per day
C. $46 per day
D. Need more information.


Answer: C. $46 per day

You regress a dummy for being unemployed on a dummy for being male. The constant (β0) from that regression is 0.2. This means that.

You regress a dummy for being unemployed on a dummy for being male. The constant (β0) from that regression is 0.2. This means that.

A. Men are 0.2 percent more likely to be unemployed than women.
B. Men are 20 percent more likely to be unemployed than women.
C. Men are 20 percentage points more likely to be unemployed than women.
D. 20 percent of women are unemployed.


Answer: D. 20 percent of women are unemployed.

Suppose you have repeated observations for participants in an experiment on the relationship between exercise and weight. What technique would help you address serial correlation in their measurements?

Suppose you have repeated observations for participants in an experiment on the relationship between exercise and weight. What technique would help you address serial correlation in their measurements?

A. Heteroskedastic robust standard errors
B. Probit regressions
C. Clustering the standard error by observation
D. Clustering the standard error by person


Answer: D. Clustering the standard error by person

In a regression with country fixed effects, which could you also include as controls?

In a regression with country fixed effects, which could you also include as controls?

A. An indicator for whether the country is landlocked.
B. A measure of the country's GDP in 1960.
C. Both A and B
D. Neither A nor B


Answer: D. Neither A nor B

A sibling fixed effects model shows the Head Start pre-school program improves children's high school graduation rates. Which of these is a valid argument that this might be an underestimate of the program's impacts on the population studied?

A sibling fixed effects model shows the Head Start pre-school program improves children's high school graduation rates. Which of these is a valid argument that this might be an underestimate of the program's impacts on the population studied?

A. Families who use Head Start care more about education than families who do not.
B. Families who use Head Start are lower income than families who do not.
C. Parents are more likely to use Head Start for a child with academic challenges.
D. Parents are more likely to use Head Start for a child with academic strengths.


Answer: C. Parents are more likely to use Head Start for a child with academic challenges.

Which of the following characteristics of an instrumental variable can be verified with certainty in the data?

Which of the following characteristics of an instrumental variable can be verified with certainty in the data?

A. Relevance
B. Exogeneity
C. Both A and B
D. Neither A nor B


Answer: A. Relevance

In a randomized control trial, spillover effects between the treatment and control groups imply that the estimated impact of the treatment is.

In a randomized control trial, spillover effects between the treatment and control groups imply that the estimated impact of the treatment is.

A. ... underestimated.
B. ... overestimated.
C. ... correctly estimated.
D. Impossible to choose A, B or C with certainty.


Answer: D. Impossible to choose A, B or C with certainty.

Which of the following is a threat to internal validity in a randomized control trial?

Which of the following is a threat to internal validity in a randomized control trial?

A. Crossovers
B. Random sampling
C. Both A and B
D. Neither A nor B


Answer: A. Crossovers

You have a dataset of blood pressure and chocolate consumption for a sample of dogs and cats. Which model allows you to determine whether the association between chocolate consumption and blood pressure is different for dogs and for cats?

You have a dataset of blood pressure and chocolate consumption for a sample of dogs and cats. Which model allows you to determine whether the association between chocolate consumption and blood pressure is different for dogs and for cats?

A. bloodpressure_hat= B0_hat + B1_hatcat + B2_hatchocolate + B3_hatdogchocolate
B. bloodpressure_hat= B0_hat + B1_hatdog + B2_hatchocolate + B3_hatdogchocolate
C. Both A and B
D. Neither A and B


Answer: C. Both A and B

You estimate the following quadratic sample regression function: Daily Earnings_hat = 450 + 50Education - 2Education^2 Assuming this relationship is causal, what do these estimates suggest about the marginal return to a year of education?

You estimate the following quadratic sample regression function:
Daily Earnings_hat = 450 + 50Education - 2Education^2
Assuming this relationship is causal, what do these estimates suggest about the marginal
return to a year of education?

A. It is increasing with education.
B. It is decreasing with education.
C. It is constant.
D. None of the above.


Answer: B. It is decreasing with education.

You regress the log of house prices on pollution and obtain the following results: ln(house prices_hat) = 5 + 0.03*Pollution This means that a one unit increase in pollution is associated with a.

You regress the log of house prices on pollution and obtain the following results:
ln(house prices_hat) = 5 + 0.03*Pollution
This means that a one unit increase in pollution is associated with a.

A. ... 3 percentage point increase in house prices.
B. ... 0.30 percentage point increase in house prices.
C. ... 30 percent increase in house prices.
D. ... 3 percent increase in house prices.


Answer: D. ... 3 percent increase in house prices.