Two-wave panel analysis: Comparing statistical methods for studying the effects of transitions

Study of the effect of transitions on individual and family outcomes is central to understanding families over the life course. There is little consensus, however, on the appropriate statistical methods needed to study transitions in panel data. This article compares lagged dependent variable (LDV) and change score (CS) methods for analyzing the effect of events in two-wave panel data. The methods are described, and their performances are compared both with a simulation and a substantive example using the National Survey of Families and Households two-wave panel. The results suggest that CS methods have advantages over LDV techniques in estimating the effect of events on outcomes in two-wave panel data.