Compositional Synthetic Controls

This paper develops a synthetic control estimator for compositional outcomes, vectors of shares generated by an underlying categorical process.

Derived from a random utility model with interactive fixed effects on relative systematic utilities, the estimator maps compositions to log-odds, where the standard convex hull condition identifies the counterfactual as a convex combination of donor log-odds.

Equivalently, it recovers the Fréchet barycenter under the Aitchison metric, the canonical geometry of the simplex (the non-linear space of shares) using a single set of weights across all categories.

I also developed a placebo inference procedure based on the Aitchison distance.

An application to Pennsylvania's electricity generation mix following the Alternative Energy Portfolio Standard uncovers a large and persistent compositional shift: natural gas exceeds its counterfactual by nearly 60 percentage points by 2022, while renewables lose relative ground.