Project Evaluation from Application to Econometric Theory: A Qualitative Explanation of Difference in Difference (DiD) Approach

The main objective of this study is to show the importance of the Difference in Difference (DiD) method and its applicability in the field of human and social sciences. The DiD method is one of the famous tools in econometrics to investigate the causal effect of the policy before and after treatment or policy. Why difference in difference method is most important in these days? Because the traditional methods requires more instructions as compare to DiD method which is easier and applicable without randomization of the data. The difference is compared with treated and non-treated group in two time’s period model with the same unit of data. The first difference removes the time-invariant factors while Difference in Difference removes the time-variant factors of the model and the remaining statistic shows the original impact of the treatment or policy.