Synthetic Control Method

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The synthetic control method is a statistical method to evaluate treatment effect in comparative case studies. It creates a synthetic version of treated units by weighting variables and observations in the control group.

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  • Synthetic Control Methods require data on outcomes in the group that receives the treatment as well as the group that does not - for both pre- and post-treatment periods

Overview

The Synthetic Control Method (SCM) is a statistical approach used to evaluate the treatment effect in comparative case studies. An SCM estimates the effect of a treatment (or intervention) of interest by comparing the evolution of an outcome variable for a unit affected by the treatment to the evolution of the same outcome variable for a synthetic control group.

The synthetic control group is created by searching for a weighted combination of control units chosen to approximate the unit affected by the treatment in terms of predictor variables. The evolution of the outcome variable for the resulting synthetic control group is an estimate of the counterfactual of what would have been observed for the affected unit in the absence of the treatment.

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This article is part of the topic Quasi-Experimental Methods.

Additional Resources

[1] Abadie, Alberto, Alexis Diamond, and Jens Hainmueller. "Comparative politics and the synthetic control method." American Journal of Political Science 59, no. 2 (2015): 495-510.

Stata Package for Synthetic Control Method

Synth - Package for Synthetic Control Method in Stata, R and MATLAB