2- This example is not real! Look at the following graph that shows counties per

Question

2- This example is not real! Look at the following graph that shows counties per capita expenditure in Brazil. In 1999, half Brazilian counties got money to spend in health and the other half hadn?t got any extra money. a) Can one use the difference-indifferences (DID) methodology to measure the impact of expenditures (on health) on the Brazilian mortality rate? Why? (5 points) b) Which color (red or blue) represents the treatment group? Why? (5 points) c) Name three problems that may arise when using the DID in this specific experiment. (10 points) d) Which kind of data (at least three) would you go for in order to control for heterogeneity between the treatment and control group? (5 points)

Explanation / Answer

A.Yes,One can use difference indifferences(DID) methodology to measure the impact of expenditures(on health) on the Brazilian mortality rate because after this methodology it can be easily measure the mortality rate.

B.Blue colour represents the treatment group beacuse looking at the blue light has been shown to lower blood pressure by calming the autonomic nervous system, while the red light causes it to rise that why blue represents treatment colour.

C.3 Problems that may arise when using DID are as follows

1. Explaining the behaviour

2. genuine research creates more problems

3.Identification of further problems

D.Systematic differences between the treatment and control group,potentially contribute to selection biases,balance the distribution in covariates between the treatment and control group are in order to control for heterogeneity between the treatment and control group.

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