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Causal Mediation Analysis in Economics: objectives, assumptions, models

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  • Viviana Celli

    (Department of Methods and Models for Economics, Territory and Finance.)

Abstract

The aim of mediation analysis is to identify and evaluate the mechanisms through which a treatment affects an outcome. The goal is to disentangle the total treatment effect into two components: the indirect effect that operates through one or more intermediate variables, called mediators, and the direct effect that captures the other mechanisms. This paper reviews the methodological advancements in causal mediation literature in economics, in particular focusing on quasi-experimental designs. It defines the parameters of interest under the counterfactual approach, the assumptions and the identification strategies, presenting the Instrumental Variables (IV), Difference-in-Differences (DID) and the Synthetic Control (SC) methods.

Suggested Citation

  • Viviana Celli, 2019. "Causal Mediation Analysis in Economics: objectives, assumptions, models," Working Papers 12/19, Sapienza University of Rome, DISS.
    • Handle: RePEc:saq:wpaper:12/19
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    File URL: http://www.diss.uniroma1.it/sites/default/files/allegati/DiSSE_Celli_wp12_2019.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    mediation; policy evaluation; direct effect; indirect effect; sequential conditional independence; quasi-experimental designs.;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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