2. Let the vertical axis of a figure indicate the mortality rate. There are two time periods, t = 1 and t = 2, where time period is measured on the horizontal axis. The following table presents average mortality rate for the treatment group and the control group. Before Treatment After Treatment Treatment 19.11 21.12 Control 20.01 20.22 (a) Enter the four points in the figure and label them Treatment, Before Treatment, Af y Control, Before and Control, After Connect the points. Finally calculate 2 and indicate the value for the difference-in-difference estimator on the graph.

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2. Let the vertical axis of a figure indicate the mortality rate. There are two time
periods, t = 1 and t = 2, where time period is measured on the horizontal axis.
The following table presents average mortality rate for the treatment group and
the control group.
Before Treatment
After Treatment
Treatment
19.11
21.12
Control
20.01
20.22
(a) Enter the four points in the figure and label them Treatment, Before Treatment, After
y Control, Before
2
and Control, After
2
Connect the points. Finally calculate
2
and indicate the value for the difference-in-difference estimator on the graph.
(b) Explain the circumstances under which the fixed effect model with panel
data is preferable to this simple difference-in-difference estimator.
Transcribed Image Text:2. Let the vertical axis of a figure indicate the mortality rate. There are two time periods, t = 1 and t = 2, where time period is measured on the horizontal axis. The following table presents average mortality rate for the treatment group and the control group. Before Treatment After Treatment Treatment 19.11 21.12 Control 20.01 20.22 (a) Enter the four points in the figure and label them Treatment, Before Treatment, After y Control, Before 2 and Control, After 2 Connect the points. Finally calculate 2 and indicate the value for the difference-in-difference estimator on the graph. (b) Explain the circumstances under which the fixed effect model with panel data is preferable to this simple difference-in-difference estimator.
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