Synthetic control method in the wild
Image courtesy of dataingovernment.blog.gov.uk Podcast-style summary by NotebookLM Academic's take Synthetic data is increasingly popular across the board. From deep learning to econometrics, artificially generated data is used for a number of purposes. In deep learning, one such use case is to train neural network models using artificially generated data. In econometrics, synthetic data has recently found another use case: creating control groups in observational studies for causal inference . Synthetic data + control groups: Synthetic controls. This is too generic of a name for a specific method. In this post, I will focus on the synthetic control approach developed by Abadie et al. (2010, 2014) and previously Abadie & Gardeazabal (2003). Athey and Imbens (2017) describe Abadie et al.'s work as "arguably the most important innovation in the policy evaluation literature in the last 15 years." Why is it needed? Measuring the causal effect of a treatment requ...