Triple Difference Designs with Heterogeneous Treatment Effects

Abstract

Triple difference designs have become increasingly popular in empirical economics. The advantage of a triple difference design is that, within a treatment group, it allows another subgroup of the population -- potentially less impacted by the treatment -- to serve as a comparison for the subgroup of interest. While literature on difference-in-differences has discussed heterogeneity in treatment effects between treated and control groups or over time, relatively little attention has been given to triple difference designs and the implications of heterogeneity in treatment effects in this setting. In this paper, I show that the parameter identified under common triple difference assumptions does not allow for causal interpretation of differences between subgroups when subgroups may differ in their underlying (unobserved) treatment effects. I propose a new parameter of interest, the controlled difference in average treatment effects on the treated, which allows for causal comparisons between subgroups. I then propose identification assumptions and doubly-robust estimators for this parameter. I use a simulation study to highlight the desirable finite-sample properties of these estimators, as well as to show the difference between the two parameters. An empirical application shows the importance of considering treatment effect heterogeneity in practical applications.