<p>0.05 is the standard for significance in economics. In that sense, the difference in pre-trends is insignificant. Nevertheless, you are justified in being concerned.</p>
<p>You may consider adding in individual-specific pre-trends to account for this. A concern is that your treatment response may be dynamic, in which case the individual-specific trends will absorb some of the treatment effect. See <a href="http://jhr.uwpress.org/content/early/2015/11/20/jhr.51.2.0414-6298R1.abstract" rel="nofollow noreferrer">Meer and West (2015)</a>.</p>

CC BY-SA 4.0
2021-09-09T09:31:57.363Z
so, you mean, if p-value of joint null test is higher than 0.05, so the parallel trend assumption being satisfied ? Is there any reference for that, I am of really curiousity
Phil Nguyen
CC BY-SA 4.0
2021-09-09T09:53:40.873Z
I mean, if your null hypothesis is "Parallel trends is true" and you use the 5% level of significance, then you fail to reject the null if the p-value is .0979. That's just basic statistics. I don't think you need a reference. Perhaps I misunderstand.
Michael Gmeiner
CC BY-SA 4.0
2021-09-09T09:57:24.350Z
I mean, it is joint null test, and the "Parallel trend is true " equal to the coefficients of joint null test should insignificant different from 0. So, it means that if the null test is true, p-value should be higher than 0.05 if you set 5% level of significance
Phil Nguyen
CC BY-SA 4.0
2021-09-09T10:17:14.750Z
The reference is here https://economics.stackexchange.com/questions/47157/what-are-the-hypothesis-and-results-explaination-of-joint-null-test
Phil Nguyen
CC BY-SA 4.0
2021-09-09T08:39:33.863Z
2021-09-09T08:39:33.863Z
Michael Gmeiner
<p>Normally when testing the parallel trend assumption in the Difference-in-Differences setting, we normally conduct the joint null test for the coefficients of pre-treatment periods. Normally, while the p-value of this test is higher than 0.1, so the parallel is satisfied. I am wondering if p-value of this test is 0.0979, whether I have any reason to conduct the Difference-in-Differences test?</p>

<econometrics>
Is there any reason to test Difference-in-Differences if paralell trend is weakly violated?
Phil Nguyen
# Is there any reason to test Difference-in-Differences if paralell trend is weakly violated?

(Asked by: username_0 on 2021-09-07)

Normally when testing the parallel trend assumption in the Difference-in-Differences setting, we normally conduct the joint null test for the coefficients of pre-treatment periods. Normally, while the p-value of this test is higher than 0.1, so the parallel is satisfied. I am wondering if p-value of this test is 0.0979, whether I have any reason to conduct the Difference-in-Differences test?

**Tags:** econometrics


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## 1 answers

### Answer by username_1 on 2021-09-09. Score: 2 | Accepted answer

0.05 is the standard for significance in economics. In that sense, the difference in pre-trends is insignificant. Nevertheless, you are justified in being concerned.

You may consider adding in individual-specific pre-trends to account for this. A concern is that your treatment response may be dynamic, in which case the individual-specific trends will absorb some of the treatment effect. See [Meer and West (2015)](http://jhr.uwpress.org/content/early/2015/11/20/jhr.51.2.0414-6298R1.abstract).

> **Comments:**
> **username_0**: so, you mean, if p-value of joint null test is higher than 0.05, so the parallel trend assumption being satisfied ? Is there any reference for that, I am of really curiousity  
> **username_1**: I mean, if your null hypothesis is "Parallel trends is true" and you use the 5% level of significance, then you fail to reject the null if the p-value is .0979. That's just basic statistics. I don't think you need a reference. Perhaps I misunderstand.  
> **username_0**: I mean, it is joint null test, and the "Parallel trend is true " equal to the coefficients of joint null test should insignificant different from 0. So, it means that if the null test is true, p-value should be higher than 0.05 if you set 5% level of significance  
> **username_0**: The reference is here https://economics.stackexchange.com/questions/47157/what-are-the-hypothesis-and-results-explaination-of-joint-null-test  

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