Now published: Looking for a great way to explain regression discontinuity designs to undergrads? Show them the causal wage return to majoring in economics! A short thread. #EconTwitter
In 2008-2012, UC Santa Cruz limited access to its economics major to students who earned at least a 2.8 GPA in their first two economics courses. Compliance was imperfect, but having a 2.8 GPA made students much more likely to declare the economics major.
Link all of those introductory economics students to their mid-20s annual wages, and voilà: students with a 2.8 economics GPA have $8,000 higher average wages. That implies that majoring in economics caused those students to earn $22,000 more in their mid-20s.