Bacon decomposition for understanding differences-in-differences with variation in treatment timing

In applications of a difference-in-differences (DD) model, researchers often exploit natural experiments with variation in onset, comparing outcomes across groups of units that receive treatment starting at different times. Goodman-Bacon (2019) shows that this DD estimator is a weighted average of all possible two-group/two-period DD estimators in the data. The -bacon- command performs this decomposition and graphs all two-by-two DD estimates against their weight, which displays all identifying variation for the overall DD estimate. Given the widespread use of the two-way fixed effects DD model, -bacon- has broad applicability across domains and will help researchers understand how much of a given DD estimate comes from different sources of variation.