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  4. December 2020
  5. Potential Outcome and Directed Acyclic Graph Approaches to Causality: Relevance for Empirical Practice in Economics

Journal of Economic Literature

ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)

Potential Outcome and Directed Acyclic Graph Approaches to Causality: Relevance for Empirical Practice in Economics

  • Guido W. Imbens
Journal of Economic Literature
vol. 58, no. 4, December 2020
(pp. 1129–79)
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Abstract

In this essay I discuss potential outcome and graphical approaches to causality, and their relevance for empirical work in economics. I review some of the work on directed acyclic graphs, including the recent The Book of Why (Pearl and Mackenzie 2018). I also discuss the potential outcome framework developed by Rubin and coauthors (e.g., Rubin 2006), building on work by Neyman (1990 [1923]). I then discuss the relative merits of these approaches for empirical work in economics, focusing on the questions each framework answers well, and why much of the the work in economics is closer in spirit to the potential outcome perspective.

Citation

Imbens, Guido W. 2020. "Potential Outcome and Directed Acyclic Graph Approaches to Causality: Relevance for Empirical Practice in Economics." Journal of Economic Literature, 58 (4): 1129–79. DOI: 10.1257/jel.20191597

Additional Materials

JEL Classification

  • C31 Multiple or Simultaneous Equation Models: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
  • C36 Multiple or Simultaneous Equation Models: Instrumental Variables (IV) Estimation
  • I26 Returns to Education