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)