1 Problem 1: PSM You have detailed observational cross-sectional data about individuals in Peru. Some individuals took part of a program called "Juntos" which is a conditional cash transfer program. Families who have a child that is 14 years or older and passed eighth grade received a $100 cash incentive. The government has elected you to evaluate how effective this cash transfer program was on increasing child education. You decide that the best type of analysis for this situation is to design a study with propensity score matching. 1. What is the treatment and control group? 2. What are your main concerns when designing this study? 3. Assuming that you could have any variable that you can think of, write a model for pation. Be sure to think about the functional form. program partici- 4. To ensure that your evaluation method is capturing causal effects, what do you check for? 5. Why would you use propensity score matching instead of another matching technique?