5 Causal Models

A causal relationship is useful for making predictions about the consequences of changing circumstances or policies; it tells us what would happen in alternative (or counterfactual) worlds."

What is the causal relationship of interest?

Some classic examples:

  • Labor and Education
    How does an additional year of schooling affect wages?

  • Political Economy and Development
    How do democratic institutions affect economic development?

  • Environment and Urban
    Do the poor receive substantive benefits from environmental clean ups?

  • Health, Crime, and Law
    Do gun-control laws actually reduce gun violence?

Source: - Angrist and Pischke, 2008. Mostly Harmless Econometrics - Economics 607: Econometrics III (Spring 2020)