Sample Selection Vs. Selection Into Treatment

This is an issue that bothered me for quite some time. So I finally decided to settle it with a blog post. I see people constantly confusing the two most common threats to causal inference—sample selection and endogeneity. This happens, for example, quite often in management research, where it is common to recommend a sample selection model in order to deal with endogenous treatments. But the two concepts are far from being equivalent. Have a look at the following graph, which describes a typical case of endogeneity. Continue reading Sample Selection Vs. Selection Into Treatment

Why you shouldn’t control for post-treatment variables in your regression

This is a slight variation of a theme, I was already blogging about some time ago. But I recently had a discussion with a colleague and thought it would be worthwhile to share my notes here. So what might go wrong if you control for post-treatment variables in your statistical model? Continue reading Why you shouldn’t control for post-treatment variables in your regression

Microsoft Releases New Python Library for Causal Inference

A while ago I blogged about Facebook’s causal inference group. Now Microsoft has followed suit and released a Python library for graph-based methods of causal inference. Continue reading Microsoft Releases New Python Library for Causal Inference

The Origins of Graphical Causal Models

Here is an interesting bit of intellectual history. In his 2000 book “Causality”, Judea Pearl describes how he got to the initial idea that sparked the development of causal inference based on directed acyclic graphs. Continue reading The Origins of Graphical Causal Models

No Free Lunch in Causal Inference

Last week I was teaching about graphical models of causation at a summer school in Montenegro. You can find my slides and accompanying R code in the teaching section of this page. It was lots of fun and I got great feedback from students. After the workshop we had stimulating discussions about the usefulness of this new approach to causal inference in economics and business. I’d like to pick up one of those points here, as this is an argument I frequently hear when talking to people with a classical econometrics training. Continue reading No Free Lunch in Causal Inference

Becoming More Different Over Time

In my class we recently discussed a paper by Higgins and Rodriguez (2006)—published in the Journal of Financial Economics—that contains an important lesson for researchers who want to apply the difference-in-differences (DiD) method in competition analysis and merger control. Continue reading Becoming More Different Over Time