Disproving Causal Relationships Using Observational Data

Henry L. Bryant, David Bessler () and Michael S. Haigh

No 21166, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Economic theory is replete with causal hypotheses that are scarcely tested because economists are generally constrained to work with observational data. This article describes the use of causal inference methods for testing a hypothesis that one random variable causes another. Contingent on a sufficiently strong correspondence between the hypothesized cause and effect, an appropriately related third variable can be employed for such a test. The procedure is intuitive, and is easy to implement. The basic logic of the procedure naturally suggests strong and weak grounds for rejecting the hypothesized causal relationship. Monte Carlo results suggest that weakly-grounded rejections are unreliable for small samples, but reasonably reliable for large samples. Strongly-grounded rejections are highly reliable, even for small samples.

Keywords: Research; Methods/; Statistical; Methods (search for similar items in EconPapers)
Pages: 25
Date: 2006
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https://ageconsearch.umn.edu/record/21166/files/sp06br03.pdf (application/pdf)

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Journal Article: Disproving Causal Relationships Using Observational Data* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea06:21166

DOI: 10.22004/ag.econ.21166

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