Add ICC feasibility guard for zero non-PSU variance

Raise ValueError when icc is set but unit_fe_sd=0, noise_sd=0, and
add_covariates=False, since the target ICC is unattainable with zero
non-PSU variance.

Co-Authored-By: Claude Opus 4.6 (1M context) <noreply@anthropic.com>

Author: igerber

diff_diff/prep_dgp.py

@@ -1405,8 +1405,14 @@ def generate_survey_did_data(
         # Include covariate variance: Var(0.5*x1) + Var(0.3*x2)
         # where x1 ~ N(0,1), x2 ~ Bernoulli(0.5)
         cov_var = (0.25 + 0.09 * 0.25) if add_covariates else 0.0
+        non_psu_var = unit_fe_sd**2 + noise_sd**2 + cov_var
+        if non_psu_var < 1e-12:
+            raise ValueError(
+                "icc requires non-zero non-PSU variance "
+                "(unit_fe_sd, noise_sd, or add_covariates must contribute variance)"
+            )
         psu_re_sd = np.sqrt(
-            icc * (unit_fe_sd**2 + noise_sd**2 + cov_var)
+            icc * non_psu_var
             / ((1 - icc) * (1 + psu_period_factor**2))
         )
 

tests/test_prep.py

@@ -1531,6 +1531,15 @@ def test_icc_parameter(self):
         realized_icc = (msb - msw) / (msb + (n_bar - 1) * msw)
         assert abs(realized_icc - target_icc) / target_icc < 0.50
 
+    def test_icc_zero_variance_rejected(self):
+        """icc with zero non-PSU variance should raise ValueError."""
+        from diff_diff.prep_dgp import generate_survey_did_data
+
+        with pytest.raises(ValueError, match="non-zero non-PSU variance"):
+            generate_survey_did_data(
+                icc=0.3, unit_fe_sd=0, noise_sd=0, add_covariates=False, seed=42
+            )
+
     def test_icc_and_psu_re_sd_conflict(self):
         """Cannot specify both icc and a non-default psu_re_sd."""
         from diff_diff.prep_dgp import generate_survey_did_data