In Data Duets, Duygu Dagli and I offered our take on Ashesh Rambachan and Jonathan Roth‘s recently published but long overdue paper now titled “A more credible approach to parallel trends.”
Problem:
We want to test the causal effect of a promotion on sales, let’s say a coupon. The coupon was sent to newer customers. Did the coupon increase the sales? Or would the new customers have bought more anyway?
Solution:
We’ll never know the answer to the last question but we can answer the first question after making some assumptions. More on this in the post.
This is less elaborate than our earlier posts on synthetic controls and Lord’s paradox. We will probably keep it this way so that we can post more often.