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Sharp Regression Discontinuity Design

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Causal Inference and the Identification ProblemRegression Discontinuity Design→→Fuzzy Regression Discontinuity Design
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Core Idea

In sharp RDD, treatment is a deterministic function of a running variable cᵢ, with discontinuous assignment at threshold c*. The causal effect is the discontinuity in E[Y|cᵢ] at c*. Nonparametric local regression near the cutoff or global polynomial fitting identifies this effect under continuity of potential outcomes.

Explainer

From your study of regression discontinuity and causal inference, you know the central problem of causal estimation: the treated and control groups differ systematically, so comparing outcomes directly confounds the treatment effect with selection differences. Sharp RDD is one of the most compelling designs for circumventing this problem, and its logic is elegant: find a threshold where assignment to treatment flips from 0 to 1 in a discontinuous jump, and use the continuity of everything else to identify the causal effect right at that threshold.

The canonical example is a scholarship program: students who score at or above a threshold exam score receive the scholarship; those just below do not. The key identifying assumption is that students cannot precisely control their score to land just above the cutoff — near the threshold, the treatment assignment is essentially as good as random. A student who scores 74.8 and misses the cutoff is nearly identical in all background characteristics to a student who scores 75.2 and receives the scholarship. Any discontinuous jump in outcomes (graduation rates, earnings) at exactly the cutoff is therefore attributable to the scholarship itself, not to pre-existing differences between recipients and non-recipients.

The running variable (also called the forcing variable or assignment variable) is the continuous measure that determines treatment. The cutoff is the threshold c* where assignment jumps. The critical identifying assumption is continuity of potential outcomes: in the absence of treatment, the expected outcome would be a smooth function of the running variable at the cutoff. This means any sharp jump in the observed outcome must be caused by the treatment. Formally, the estimand is a Local Average Treatment Effect (LATE): the effect of treatment on individuals right at the threshold, not the average effect in the full population.

Estimation proceeds by fitting regression models on either side of the cutoff and measuring the discontinuous gap at c*. The practical challenge is bandwidth selection: observations far from the cutoff use different regions of the running variable distribution and are less comparable. Narrower bandwidths improve comparability at the cost of smaller samples. Modern practice uses local linear regression (fitting linear regressions in a narrow window around the cutoff) with data-driven bandwidth selection methods like the Imbens-Kalyanaraman or CCT bandwidth selectors. Global polynomial fitting is generally discouraged because high-degree polynomials produce unstable estimates near the edges of the sample.

Validity checks are essential in any RDD application. The most important is a density test (McCrary test): if individuals can manipulate the running variable to land just above the cutoff, you will see a suspicious spike in the density of the running variable just above c*. If manipulation is present, the local-randomization argument fails. A second check is placebo tests: verify that pre-determined covariates (age, gender, baseline characteristics) show no discontinuity at the cutoff. If observable covariates jump discontinuously, unobservable ones likely do too, undermining the identification assumption. When these checks pass, sharp RDD delivers among the most credible causal estimates available from observational data.

Practice Questions 5 questions

Prerequisite Chain

Understanding Zero → The Number Zero → Counting to Five → Counting to 10 → Counting to 20 → Counting a Set of Objects Up to 20 → Cardinality: The Last Number Counted → Matching Numerals to Quantities → Subitizing Small Quantities → Addition Within 10 → Number Bonds to 10 → Addition Within 20 → Doubles and Near Doubles → Doubles Facts Within 10 → Near Doubles Facts Within 20 → Mental Math Strategies for Addition → Mental Math: Adding and Subtracting Tens → Addition Within 100 → Repeated Addition as Multiplication → Multiplication as Equal Groups → Multiplication: Arrays → Basic Multiplication Facts (0s, 1s, 2s, 5s, 10s) → Multiplication Facts Within 100 → Division as Equal Sharing → Division as Grouping (Measurement Division) → Division: Grouping (Repeated Subtraction) Model → Division: Fair Sharing Model → Division as Equal Sharing → Division as Grouping → Basic Division Facts → Division Facts Within 100 → Multiplication and Division Fact Families → Relationship Between Multiplication and Division → Division Facts as Inverse of Multiplication → Remainders and Quotients in Division → Division Word Problems → Multi-Step Word Problems → Solving Multi-Step Word Problems → Multiplication Word Problems → Division Word Problems → Introduction to Long Division → Factors and Multiples → Prime and Composite Numbers → Equivalent Fractions → Relating Fractions and Decimals → Decimal Place Value → Integers and the Number Line → Comparing and Ordering Integers → Absolute Value → Adding Integers → Subtracting Integers → Multiplying Integers → Dividing Integers → Unit Rates → Proportions → Percent Concept → Converting Between Fractions, Decimals, and Percents → Operations with Rational Numbers → Two-Step Equations → Solving Multi-Step Equations → Equations with Variables on Both Sides → Angle Pairs: Complementary, Supplementary, and Vertical → Parallel Lines and Transversals → Corresponding Angles → Alternate Interior Angles → Triangle Angle Sum Theorem → Exterior Angle Theorem → Triangle Inequality Theorem → Similar Triangles: AA Similarity → Similar Triangles: SSS and SAS Similarity → Proportions in Similar Triangles → Right Triangle Trigonometry Introduction → Sine, Cosine, and Tangent Ratios → Trigonometric Ratios Review → Radian Measure → Converting Between Degrees and Radians → The Unit Circle → Graphing Sine and Cosine → Graphing Tangent and Reciprocal Trigonometric Functions → Derivatives of Trigonometric Functions → Antiderivatives → Indefinite Integrals → Basic Integration Rules → Riemann Sums → Definite Integral Definition → Probability Density Functions and Continuous Distributions → Cumulative Distribution Functions → Continuous Random Variables → Probability Density Functions → Expected Value → Weak Law of Large Numbers → Probability Axioms and Rules → Conditional Probability → Independence of Events → Sampling Distributions → Standard Error of Estimators → Hypothesis Testing: Framework and Logic → P-values and Statistical Significance → Effect Size and Practical Significance → Hypothesis Testing: Framework and Logic → Z-Tests and T-Tests for Means → One-Sample Z-Test for Means → One-Sample and Two-Sample T-Tests → Inference in Linear Regression → Prediction Intervals in Regression → Linear Regression Basics → Residuals and Goodness of Fit (R²) → Simple (Bivariate) OLS Regression → Classical OLS Assumptions (Gauss-Markov) → Multiple Regression → Interpreting Regression Coefficients → Hypothesis Testing in Regression → F-Test and Joint Significance → R-Squared and Model Fit → Omitted Variable Bias → Causal Inference and the Identification Problem → Potential Outcomes and the Rubin Causal Model → Regression Discontinuity Design → Sharp Regression Discontinuity Design

Longest path: 119 steps · 587 total prerequisite topics

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