arXiv:2609.27299v1 Announce Type: cross
Abstract: Information systems (IS) researchers increasingly use quasi-experimental methods such as difference-in-differences (DiD) and instrumental variables (IV) to recover causal effects from observational panel data. Power calculations that justify these designs assume i.i.d. errors, but the deeper problem is what even a cluster-robust calculator cannot see. We report a Monte Carlo study over 9837 parameter conditions (approx 9.8 million datasets) and decompose the planned-versus-achieved power gap. The serial-correlation component is recoverable by an AR(1)-aware calculator when rho is known, and partially when rho must be estimated from short pre-periods, but panel attrition, staggered-adoption bias, and parallel-trends pretesting are captured by no closed-form formula; exogenous attrition alone costs approx 8 to 11 percentage points at the few-hundred-to-thousand sample sizes IS studies use. Treatment-correlated, outcome-dependent attrition instead induces bias, not just power loss. For IV, holding first-stage F fixed, larger N neither raises power nor curbs exclusion bias, though with a fixed instrument more data does sharpen the first stage, so identification rests on instrument strength, not sample size.
Abstract: Information systems (IS) researchers increasingly use quasi-experimental methods such as difference-in-differences (DiD) and instrumental variables (IV) to recover causal effects from observational panel data. Power calculations that justify these designs assume i.i.d. errors, but the deeper problem is what even a cluster-robust calculator cannot see. We report a Monte Carlo study over 9837 parameter conditions (approx 9.8 million datasets) and decompose the planned-versus-achieved power gap. The serial-correlation component is recoverable by an AR(1)-aware calculator when rho is known, and partially when rho must be estimated from short pre-periods, but panel attrition, staggered-adoption bias, and parallel-trends pretesting are captured by no closed-form formula; exogenous attrition alone costs approx 8 to 11 percentage points at the few-hundred-to-thousand sample sizes IS studies use. Treatment-correlated, outcome-dependent attrition instead induces bias, not just power loss. For IV, holding first-stage F fixed, larger N neither raises power nor curbs exclusion bias, though with a fixed instrument more data does sharpen the first stage, so identification rests on instrument strength, not sample size.
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