Experimental and Non-Experimental Methods in Development Economics
A Porous Dialectic
This paper surveys six widely-used non-experimental methods for estimating treatment effects (instrumental variables, regression discontinuity, direct matching, propensity score matching, linear regression and non-parametric methods, and difference-in-differences), and assesses their internal and external validity relative both to each other and to randomized controlled trials. While randomized controlled trials can achieve the highest degree of internal validity when cleanly implemented in the field, the availability of large, nationally representative data sets offers the opportunity for a high degree of external validity using non-experimental methods. We argue that each method has merits in some context and they are complements rather than substitutes.