IDEAS home Printed from
   My bibliography  Save this paper

Probability and Structure in Econometric Models


  • Kevin D Hoover


The difficulty of conducting relevant experiments has long been regarded as the central challenge to learning about the economy from data. The standard solution, going back to Haavelmo's famous "The Probability Approach in Econometrics" (1944), involved two elements: first, it placed substantial weight on a priori theory as a source of structural information, reducing econometric estimates to measurements of causally articulated systems; second, it emphasized the need for an appropriate statistical model of the data. These elements are usually seen as tightly linked. I argue that they are, to a large extent, separable. Careful attention to the role of an empirically justified statistical model in underwriting probability explains puzzles not only in economics, but more generally with respect to recent criticisms of Reichenbach's principle of the common cause, which lies behind graph-theoretic causal search algorithms. And it provides an antidote to the pessimistic understanding of the possibilities for passive observation of causal structure in econometrics and related areas of Nancy Cartwright and others.

Suggested Citation

  • Kevin D Hoover, 2010. "Probability and Structure in Econometric Models," Working Papers 10-02, Duke University, Department of Economics.
  • Handle: RePEc:duk:dukeec:10-02

    Download full text from publisher

    File URL:
    File Function: main text
    Download Restriction: no

    References listed on IDEAS

    1. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2006. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," American Economic Review, American Economic Association, vol. 96(4), pages 988-1012, September.
    2. Gamper-Rabindran, Shanti & Khan, Shakeeb & Timmins, Christopher, 2010. "The impact of piped water provision on infant mortality in Brazil: A quantile panel data approach," Journal of Development Economics, Elsevier, vol. 92(2), pages 188-200, July.
    3. repec:aph:ajpbhl:10.2105/ajph.2003.036848_4 is not listed on IDEAS
    4. Alberto Abadie & Joshua Angrist & Guido Imbens, 2002. "Instrumental Variables Estimates of the Effect of Subsidized Training on the Quantiles of Trainee Earnings," Econometrica, Econometric Society, vol. 70(1), pages 91-117, January.
    5. Sastry, Narayan & Burgard, Sarah, 2005. "The prevalence of diarrheal disease among Brazilian children: trends and differentials from 1986 to 1996," Social Science & Medicine, Elsevier, vol. 60(5), pages 923-935, March.
    6. Jalan, Jyotsna & Ravallion, Martin, 2003. "Does piped water reduce diarrhea for children in rural India?," Journal of Econometrics, Elsevier, vol. 112(1), pages 153-173, January.
    7. James J. Heckman & Jeffrey Smith & Nancy Clements, 1997. "Making The Most Out Of Programme Evaluations and Social Experiments: Accounting For Heterogeneity in Programme Impacts," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 487-535.
    8. Lee, Lung-fei & Rosenzweig, Mark R. & Pitt, Mark M., 1997. "The effects of improved nutrition, sanitation, and water quality on child health in high-mortality populations," Journal of Econometrics, Elsevier, vol. 77(1), pages 209-235, March.
    9. Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40.
    10. Abrevaya, Jason & Dahl, Christian M, 2008. "The Effects of Birth Inputs on Birthweight," Journal of Business & Economic Statistics, American Statistical Association, vol. 26, pages 379-397.
    11. Patricia Stefani & Ciro Biderman, 2006. "Returns to Education and Wage Differentials in Brazil: A Quantile Approach," Economics Bulletin, AccessEcon, vol. 9(1), pages 1-6.
    12. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2008. "Distributional impacts of the Self-Sufficiency Project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 748-765, April.
    13. Michael Kremer & Jessica Leino & Edward Miguel & Alix Peterson Zwane, 2011. "Spring Cleaning: Rural Water Impacts, Valuation, and Property Rights Institutions," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 145-205.
    14. Narayan Sastry, 1996. "Community characteristics, individual and household attributes, and child survival in brazil," Demography, Springer;Population Association of America (PAA), vol. 33(2), pages 211-229, May.
    15. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, March.
    16. Khan, Shakeeb & Tamer, Elie, 2009. "Inference on endogenously censored regression models using conditional moment inequalities," Journal of Econometrics, Elsevier, vol. 152(2), pages 104-119, October.
    17. Abou-Ali, Hala, 2003. "The effect of water and sanitation on child mortality in Egypt," Working Papers in Economics 112, University of Gothenburg, Department of Economics.
    18. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    19. Alves, Denisard & Belluzzo, Walter, 2004. "Infant mortality and child health in Brazil," Economics & Human Biology, Elsevier, vol. 2(3), pages 391-410, December.
    20. Jason Abrevaya, 2001. "The effects of demographics and maternal behavior on the distribution of birth outcomes," Empirical Economics, Springer, vol. 26(1), pages 247-257.
    21. Rosenzweig, Mark R & Wolpin, Kenneth I, 1986. "Evaluating the Effects of Optimally Distributed Public Programs: ChildHealth and Family Planning Interventions," American Economic Review, American Economic Association, vol. 76(3), pages 470-482, June.
    22. Ahn, Seung C. & Lee, Young H. & Schmidt, Peter, 2013. "Panel data models with multiple time-varying individual effects," Journal of Econometrics, Elsevier, vol. 174(1), pages 1-14.
    23. Curtis, Valerie & Kanki, Bernadette & Mertens, Thierry & Traore, Etienne & Diallo, Ibrahim & Tall, François & Cousens, Simon, 1995. "Potties, pits and pipes: Explaining hygiene behaviour in Burkina Faso," Social Science & Medicine, Elsevier, vol. 41(3), pages 383-393, August.
    24. Narayan Sastry & Sarah Burgard, 2002. "Diarrheal Disease and its Treatment among Brazilian Children: Stagnation and Progress over a Ten-Year Period," Working Papers 02-04, RAND Corporation.
    25. Duncan Thomas & John Strauss & Maria-Helena Henriques, 1991. "How Does Mother's Education Affect Child Height?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 183-211.
    26. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    27. Thomas, Duncan & Strauss, John, 1992. "Prices, infrastructure, household characteristics and child height," Journal of Development Economics, Elsevier, vol. 39(2), pages 301-331, October.
    28. Barrera, Albino, 1990. "The role of maternal schooling and its interaction with public health programs in child health production," Journal of Development Economics, Elsevier, vol. 32(1), pages 69-91, January.
    29. Victor Chernozhukov & Christian Hansen, 2005. "An IV Model of Quantile Treatment Effects," Econometrica, Econometric Society, vol. 73(1), pages 245-261, January.
    30. Mushfiq Mobarak, Ahmed & Rajkumar, Andrew Sunil & Cropper, Maureen, 2005. "The political economy of health services provision and access in Brazil," Policy Research Working Paper Series 3508, The World Bank.
    31. Senauer, Benjamin & Kassouf, Ana L, 2000. "The Effects of Breastfeeding on Health and the Demand for Medical Assistance among Children in Brazil," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 719-736, July.
    32. Watson, Tara, 2006. "Public health investments and the infant mortality gap: Evidence from federal sanitation interventions on U.S. Indian reservations," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1537-1560, September.
    33. Thomas, Duncan & Strauss, John & Henriques, Maria-Helena, 1990. "Child survival, height for age and household characteristics in Brazil," Journal of Development Economics, Elsevier, vol. 33(2), pages 197-234, October.
    34. Ahn, Seung Chan & Hoon Lee, Young & Schmidt, Peter, 2001. "GMM estimation of linear panel data models with time-varying individual effects," Journal of Econometrics, Elsevier, vol. 101(2), pages 219-255, April.
    35. Barnum, Howard, 1988. "Interaction of infant mortality and fertility and the effectiveness of health and family planning programs," Policy Research Working Paper Series 65, The World Bank.
    36. Joseph Potter & Carl Schmertmann & Suzana Cavenaghi, 2002. "Fertility and development: evidence from Brazil," Demography, Springer;Population Association of America (PAA), vol. 39(4), pages 739-761, November.
    37. repec:aph:ajpbhl:2001:91:10:1565-1570_0 is not listed on IDEAS
    38. repec:ebl:ecbull:v:9:y:2006:i:1:p:1-6 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item


    econometrics; causality; causal search; graph-theory; probability; principle of the common cause; identification; Haavelmo; Reichenbach; Cartwright;

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:duk:dukeec:10-02. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Department of Economics Webmaster). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.