What is the purpose of the difference-in-differences approach in policy evaluation?

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Difference-in-differences uses changes over time to isolate the effect of a policy. By comparing how an outcome changes from before to after the policy in a group that is affected to a similar group that is not, you subtract out baseline differences between the groups and any common trends that would affect both. The remaining difference in changes is attributed to the policy, assuming the two groups would have followed parallel trajectories if the policy hadn’t occurred. This approach isn’t about a single snapshot, not about measuring random noise, and not about evaluating physician satisfaction alone. When the parallel-trends assumption holds, it cleanly separates policy effects from ongoing trend factors.