August 2018

IZA DP No. 11796: Methods Matter: P-Hacking and Causal Inference in Economics

published as 'Methods Matter: P-Hacking and Publication Bias in Causal Analysis in Economics' in: American Economic Review, 2020, 110 (11), 3634-3660

The economics 'credibility revolution' has promoted the identification of causal relationships using difference-in-differences (DID), instrumental variables (IV), randomized control trials (RCT) and regression discontinuity design (RDD) methods. The extent to which a reader should trust claims about the statistical significance of results proves very sensitive to method. Applying multiple methods to 13,440 hypothesis tests reported in 25 top economics journals in 2015, we show that selective publication and p-hacking is a substantial problem in research employing DID and (in particular) IV. RCT and RDD are much less problematic. Almost 25% of claims of marginally significant results in IV papers are misleading.