#1. Impact Evaluation

In the move to online instruction due to COVID-19, Development University was concerned that its students may not have the technology they needed at home to keep up with their classes. In order to address this issue, at the start of the term, the University offered all students coupons for a 50% price discount on a new iPad. The hope was that the iPad would allow students to participate more fully in their online classes, and therefore allow them to learn more.

Development University heard that you have learned how to do impact evaluation in your economics classes, so asked you to evaluate how well the iPads worked for their students. In particular, they wanted to know if the iPads caused student grades to improve. In looking at the data, you notice that although all students were offered the coupon, only half of them purchased an iPad through the program. Therefore, you decide to compare the average GPAs of students who purchased an iPad to those who didn't. You find that students who purchased an iPad had an average GPA of 3.4, and students who did not purchase an iPad had an average GPA of 3.1.

4) Calculate the ATE using the GPAs provided. Is this estimate the True Average Treatment Effect (ATE)? Why or why not?

5) Do you expect selection bias to be positive, negative, or zero in this case? (The answer should be consistent with how the data was collected.)

6) Briefly explain one potential cause of selection bias. (The answer should demonstrate a clear understanding of selection bias and what would cause it.)