On January 1, 2017, the City of Philadelphia introduced a tax on sugar-sweetened beverages and sugar-substitute beverages.
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- On January 1, 2017, the City of Philadelphia introduced a tax on sugar-sweetened beverages and sugar-substitute beverages. A telephone survey of 1777 people in Philadelphia and in nearby cities (Trenton, Camden, and Wilmington) obtained data on whether those people drank bottled water on a daily basis in the month prior to the tax being introduced (December 2016) and in the month following the tax being introduced (January 2017). In December, 46.5% of Philadelphians and 43.9% of non-Philadelphians reported being daily drinkers of bottled water. In January, 50.2% of Philadelphians and 37.2% of non-Philadelphians reported being daily drinkers of bottled water.
- Estimate the effect of the tax on Philadelphians’ frequency of daily bottled water consumption using the difference in differences estimator. State the estimated effect in words – don’t just provide a number. (Show your numerical work for partial credit in case of computational error.)
- What OLS regression using the 1777 individual observations would obtain the same numerical estimate of the effect as does the difference-in-differences estimator in (i). Define each variable that appears in the regression.
- Indicate which coefficient’s OLS estimate or what combination of OLS coefficient estimates from the regression given in (ii) would equal the difference-in-differences estimator.
- If the assumptions underlying the difference-in-differences estimator’s unbiasedness were satisfied, would a regression with added demographic variables for the individuals be any better than the difference-in-differences estimator in (iii)? VERY briefly explain.
If the assumptions underlying the difference-in-differences estimator’s unbiasedness were not satisfied, would a regression with added demographic variables for the individuals be preferable to the difference-in-differences estimator in (iii)? VERY briefly explain.
Related Book For
Advanced Accounting
ISBN: 978-1259444951
13th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupni
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