I have a certain law as my (non-binary) treatment variable (range: 0-2) at the state level which takes on different values based on whether it prohibits altogether (2), limits (1), or allows the unlimited (0) flow of money to political candidates as campaign contributions.

And there are many such laws, for example, contributions from individuals to political candidates (CFIC), contributions from PACs to political candidates (CFPC), etc., that I am using to delineate the effect of these laws on my outcome variable.

In a simple regression framework, I can use each of these laws individually or by adding them up (e.g., CFIC + CFPC -> taking on values from 0 to 4) as my independent variable. This much is straightforward.

The tricky part begins when my treatment variable (non-binary standalone laws or a sum of laws) have the following Generalized DiD kind of a setting:

  1. Late and early adopters i.e. staggered adoption
  2. Treatment status switches between 0 1 2 for some states - from 0 to 2 or 1 to 2 or 2 to 1 or 1 to 0, etc. (analogous to changing of treatment status from 0 to 1 in one year and then from 1 to 0 after some years)
  3. No specific control groups/states (except for only 2 out of 50 US states)

A similar application of DiD with varying treatment intensity or non-binary treatment can be found here: Difference in Differences Model Specification with Year-Quarter Effects (treatment non-binary)

In summary, I need help with applying generalized DiD in a non-binary treatment setting.

Thank you in advance.

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  • $\begingroup$ Welcome. So you're investigating more than one law/policy, each with its own intensity structure? $\endgroup$ – Thomas Bilach Apr 7 at 0:27
  • $\begingroup$ I realized my previous question wasn't entirely clear. Suppose you have a policy introduced in a subset of U.S. states and not others. The treatment variable may take on values from 0–2, where each step up the ladder is a different level of intensity; I assume 0 represents the absence of campaign contributions. But in your setting, is each shift in intensity the result of the same law or do some states enact completely new laws which affect contributions? If you could provide further clarification that would be helpful. $\endgroup$ – Thomas Bilach Apr 7 at 2:01
  • $\begingroup$ There are many different kinds of laws on campaign contribution across the US states which regulate the flow of contributions from donors to political candidates. Donors can be categorized as individuals, labor unions, corporations, and political actions committees (PACS) (there are other donor categories as well but for my analysis, these are most relevant). So for each of the donors, a different law exists. For example, consider these laws: - contributions from individuals to candidates - contributions from labor unions to candidates - contributions from PACs to candidates $\endgroup$ – Ahmed Chaudhry Apr 8 at 2:24
  • $\begingroup$ For example, consider these laws: - contributions from individuals to candidates - contributions from labor unions to candidates - contributions from PACs to candidates - contributions from corporation to candidates Different states may have a subset of these laws in place or all of them enacted. $\endgroup$ – Ahmed Chaudhry Apr 8 at 2:32
  • $\begingroup$ As for range is concerned, I mistyped in earlier in my post and now I have corrected it. The correct form is that if a state allows unlimited contribution from a particular donor to candidates then it is coded as 0. If it limits the amount to some $ figure, then it takes the value of 1, and if a state prohibits contributions from a particular donor then I have a value of 0. $\endgroup$ – Ahmed Chaudhry Apr 8 at 2:37

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