This post will review the econometric method of difference-in-discontinuities design, outlining the technical details, the strength and weaknesses, and provide an intuitive explanation for how this method can be used to identify causal effects of a treatment policy. In doing so, we will refer to its application in Ferguson and Kim (2023). Firstly, we outline the empirical question posed by Ferguson and Kim (2023) and discuss some potential ways of answering this question, to then motivate the use of the difference-in-discontinuities design approach.

Ferguson and Kim (2023) apply the difference-in-discontinuities technique to answer the question of whether a policy of decentralised agricultural production (called the Household Responsibility System or HRS) can causally explain the increase in agricultural yields seen in China in the late 1970s and 1980s. [...]