Graphical Presentation of Regression Discontinuity Results

The Political Methodologist

[Editor’s note: this post is contributed by Natalia Bueno and Guadalupe Tuñón.]

During the last decade, an increasing number of political scientists have turned to regression-discontinuity (RD) designs to estimate causal effects.  Although the growth of RD designs has stimulated a wide discussion about RD assumptions and estimation strategies, there is no single shared approach to guide empirical applications. One of the major issues in RD designs involves selection of the “window” or “bandwidth” — the values of the running variable that define the set of units included in the RD study group. [i]

This choice is key for RD designs, as results are often sensitive to bandwidth size. Indeed, even those who propose particular methods to choose a given window agree that “irrespective of the manner in which the bandwidth is chosen, one should always investigate the sensitivity of the inferences to this choice. […] [I]f the results…

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New R package to characterize the spatial structure of point patterns

Erik Marcon, Stephane Traissac, Florence Puech and Gabriel Lang have developed the R package dbmss that provides a toolbox to characterize point patterns. The package greatly simplifies the task of obtaining distance-based agglomeration and coagglomeration indexes, such as the Duranton and Overman’s Kd function and the Marcon and Puech’s M functions.

Eating chocolate has made the Swiss smarter. Really?

I found an article that studies the beneficial effect of chocolate consumption on cognitive function. To prove his theory, the author uses the correlation between countries’ annual per capita chocolate consumption and the number of Nobel Laureates per 10 million people. And…nothing else.

Correlation

Chocolate and Nobel Laureates

The study acknowledges some of its very obvious methodological limitations, but still concludes that “since chocolate consumption has been documented to improve cognitive function, it seems most likely that in a dose-dependent way, chocolate intake provides the abundant fertile ground needed for the sprouting of Nobel laureates.”

Now, for all we know the correlation is not “surprisingly powerful”, as the author concludes, but a mere coincidence. The many  non-sense correlation plots shared recently on social media have helped popularizing the idea that “correlation does not imply causation”.  The interesting fact about this article, however, is that it was published in the New England Journal of Medicine, one of the most prestigious medical journals in the world (featuring a staggering 54.42 (!!) impact factor). To be fair, the article is published as an “occasional note”, which also seems to serve as a humor section. If only all top-journals had such a twisted sense of humor!

On transport subsidies and employment

The current mayor of Bogotá, Gustavo Petro, launched last week a transport subsidy program for the poor. At least 300,000 people covered by the nationwide health subsidy program (Sisben) can now obtain a transport card allowing them to travel in the integrated transport system of the city at a reduced rate. According to the mayor, the subsidy is the flagship policy for poverty reduction of his administration, as it will allow the poor to access more job and income generation opportunities, even if these opportunities are at the bottom of the informal economy (nivel de rebusque).

While this policy may be good news for poverty reduction, my co-author Héctor Mauricio Posada and I have found in our recent paper that a policy that offers transport subsidies for informal workers only will imply an increase in the share of informal employment, and a decrease in overall welfare in the city. In our theoretical model, informal workers have the possibility to engage in home-based work and save in transportation costs, while formal workers commute every day to work in the city center. A subsidy targeted only for informal workers means that formal firms have to offer higher wages in order to compensate workers for higher transportation costs, which implies a reduction in formal employment creation.

We find that investing the money of the subsidy in alternative policies aimed at reducing the frictions in the job market, such as a the recently created Public Management Agency for Employment  (Bogotá Trabaja), or expanding the coverage of the transportation network, implies a reduction in the informality rate, and an increase in overall welfare.

While our findings rely on a very stylized model that does not consider many other relevant elements, such as access to basic services and their impact on poverty reduction, they highlight the importance of considering the unintended effects of policies targeted at the poor on the labor market at large. Sustainable urban policies require not only better physical access, but also an increase in the share of higher quality jobs offered in the city.

 

Talk about divergence

I agree with Hans Rosling in that an effective way of introducing the basic facts of economic development to students is through myth debunking. The resources provided in his website are certainly useful in this respect. One of the best ways to use this resource is to find those striking cases of divergence in outcomes that disprove a generally accepted fact. A particularly example I find mind-blowing is the stark divergence in the evolution of incomes and life expectancy in Equatorial Guinea and Madagascar between 1990 and 2012…

EG_Madagascar

A visual example of home-based work

This video of the national anthem of Colombia contains good examples of home-based (informal) activities. It depicts a typical afternoon in Santo Domingo, one of Medellin’s poorer neighborhoods. People are involved in different productive activities, such as simple manufacturing and retail selling.

Dense neighborhoods are typically very lively, and many people conduct their occupations near or at their homes. In my current research I am trying to incorporate these features of cities in developing countries in order to understand the link between commuting patterns and job status.

Love is also predictable

Three (cool?) Italian guys have developed a mathematical model for mimicking the love story between Scarlett and Rhett, the main characters of the most popular movie of all times, “Gone with the Wind”. They got a bit carried away and claimed this to be the “first serious modeling application in the field of love dynamics”. Still, the article is very interesting, especially because it shows there is nothing random when it comes to targeting large audiences.