| X | Z | X.Z |
|---|---|---|
| 0 | 0 | 0 |
| 1 | 0 | 0 |
| 0 | 1 | 0 |
| 1 | 1 | 1 |
Carolina Torreblanca
University of Pennsylvania
Global Development: Intermediate Topics in Politics, Policy, and Data
PSCI 3200 - Spring 2026
Development and Gender
Chattopadhyay and Duflo, 2004
Interaction Models
The two are undoubtedly related
But could improving gender representation produce development?
Why might having more women in office improve development?
Women may want different things
Women may behave differently
Women may be better at their job
Women representatives may teach about equality
Seems like a good theory with important implications that we want to validate empirically
Imagine we have data on share of female legislators and many development outcomes
We compare places with female politicians to places with male politicians and see development differences
What is the problem with this?
Rules requiring minimum women’s representation in politics
Goal: Improve gender parity in government
Vary by country, region, and level of government
Typically set minimum thresholds (20-50%)
Started in 1990s, expanded rapidly
Now used in about 130 countries
Most common in newer democracies
Less common in older democracies (US, Japan)
Highest representation achieved in Rwanda (61%)
India reserved 1/3 of village council (panchayat) head positions for women (1993)
Reserved positions assigned by random lottery
Randomization creates natural experiment
Solves confounding problem \(\rightarrow\) can identify causal effects!
Does mandated representation of women change policy outcomes?
Hypothesis: Reserved villages invest more in goods women prioritize
Treatment: Village council randomly assigned a female head (reserved seat lottery)
\(Y_{ij} = \beta_1 + \beta_2 * R_j + \beta_3 D_i * R_j + \sum_{l=1}^{N} \beta_l d_{li} + \epsilon_{ij}\)
Where:
\(Y_{ij}\) is an outcome of interest
\(R_j\) takes the value of 1 if GP is reserved
\(D_i\) is gender difference in requests for that good (women - men)
\(d_{li}\) are good Fixed Effects!
An interaction term is the product of two variables used as a covariate in a regression model
Captures how the effect of one variable depends on the value of another variable
Powerful for testing conditional hypotheses
Key Modeling Assumption
An increase in \(X\) is associated with an increase in \(Y\) only when a specific condition is met
\(Y_{i} = \alpha + \beta_1 * X_i + \beta_2 * Z_i + \epsilon_{i}\)
\(\hat{\beta_1}\) represents the change in \(Y\) when \(X\) increases by one unit
\(\hat{\beta_2}\) represents the change in \(Y\) when \(Z\) increases by one unit
Why?
A partial derivative of the equation shows how \(Y\) changes when \(X\) changes by 1:
\(Y_{i} = \alpha + \beta_1 * X_i + \beta_2 * Z_i + \epsilon_{i}\)
\(\frac{\partial Y}{\partial X} = \beta_1\)
\(\frac{\partial Y}{\partial Z} = \beta_2\)
\(Y = \alpha + \beta_1X + \beta_2Z + \beta_3(X*Z) + \epsilon\)
| X | Z | X.Z |
|---|---|---|
| 0 | 0 | 0 |
| 1 | 0 | 0 |
| 0 | 1 | 0 |
| 1 | 1 | 1 |
\(Y_{i} = \alpha + \beta_1 * X_i + \beta_2 * Z_i + \beta_3 * Z_i * X_i + \epsilon_{i}\)
How to interpret \(\beta_3\): Expected change in Y when the product of \(X \times Z\) increases by 1 unit.
How to interpret \(\beta_1\): Change in Y when X increases by 1 unit AND \(Z =0\)
How to interpret \(\beta_2\): Change in Y when X increases by 1 unit AND \(X =0\)
Why does the interpretation of \(\beta_1\) and \(\beta_2\) change?
\(Y_{i} = \alpha + \beta_1 * X_i + \beta_2 * Z_i + \beta_3 * Z_i * X_i \epsilon_{i}\)
\(\frac{\partial Y}{\partial X} = \beta_1 + \beta_3*Z_i\)
\(\frac{\partial Y}{\partial Z} = \beta_2 + \beta_3*X_i\)
Use for conditional hypotheses
Always include all constituent terms
Interpret \(\beta_1\) and \(\beta_2\) correctly
Recall:
\[\frac{\partial Y}{\partial X} = \beta_1 + \beta_3 \cdot Z\]
marginaleffects evaluates this at specified values of \(Z\) and computes uncertaintyTwo cases: \(Z\) is binary vs. \(Z\) is continuous
# Effect of women's representation on policy outcome, by quota status
slopes(model_binary,
variables = "women_rep",
by = "quota")
Term quota Estimate Std. Error z Pr(>|z|) S 2.5 % 97.5 %
women_rep 0 -0.547 0.177 -3.1 0.00194 9.0 -0.893 -0.201
women_rep 1 2.351 0.185 12.7 < 0.001 120.6 1.989 2.714
Type: response
Columns: term, quota, estimate, std.error, statistic, p.value, s.value, conf.low, conf.high
When \(Z\) is continuous, the marginal effect varies across the full range of \(Z\)
Back to C&D logic: as \(D_i\) increases (women want a good more relative to men), does the effect of reservation on investment grow?
plot_slopes(model_cont,
variables = "reservation",
condition = "pref_gap") +
geom_hline(yintercept = 0, linetype = "dashed", color = "grey40") +
labs(x = expression(D[i] ~ "(gender gap in requests: women - men)"),
y = "Effect of GP reservation\non public investment",
caption = "Simulated data") +
theme_minimal(base_size = 16)Binary moderator - Two point estimates with CIs – does the effect change sign or magnitude?
Continuous moderator - A line with CI band – where does the effect become significant? Where does it flip?
Both are \(\beta_1 + \beta_3 \cdot Z\) evaluated at different values of \(Z\) – marginaleffects handles the standard errors