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Curriculum› How Economists Know Things: Evidence & Experiments› How Economists Know Things: Checkpoint 1

Checkpoint quiz · How Economists Know Things: Evidence & Experiments

How Economists Know Things: Checkpoint 1

Quick checkpoint - five questions on counterfactuals, randomised trials, natural experiments and other research designs.

Quick checkpoint - five questions on counterfactuals, randomised trials, natural experiments and other research designs.

Question 1 of 5 What is a counterfactual?

A statistic that has been revised What would have happened without the programme or policy being studied A theory that has been proven wrong A type of government survey

Because the counterfactual can never be observed directly, economists need research designs to estimate it.

Question 2 of 5 Why does random assignment help identify causal effects?

It makes studies cheaper It makes the treatment and control groups alike on average, so differences in outcomes reflect the treatment It guarantees the treatment works It removes the need for data

Randomisation balances motivation, income and everything else by chance.

Question 3 of 5 Which study compared fast-food restaurants in New Jersey and Pennsylvania?

The Mariel boatlift study Card and Krueger's minimum wage study The Vietnam draft lottery study The Kenyan deworming study

New Jersey raised its minimum wage in 1992 while Pennsylvania did not.

Question 4 of 5 What does difference-in-differences depend on?

Both groups starting at the same level The parallel trends assumption: without the policy, both groups would have changed in the same way Random assignment of the policy A very large sample size only

The groups can start at different levels, but their trends must be similar.

Question 5 of 5 What must a valid instrumental variable do?

Affect the outcome through many different routes Affect the choice being studied and influence the outcome only through that choice Be chosen by the people being studied Have no effect on the choice

These are the relevance condition and the exclusion restriction.

← Back to Instrumental Variables in Plain Language Next lesson → Laboratory Experiments in Economics

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