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On the Role of Counterfactuals in Inferring Causal Effects of Treatments

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  • Kluve, Jochen

    (KfW Development Bank)

Abstract

Causal inference in the empirical sciences is based on counterfactuals. This paper presents the counterfactual account of causation in terms of Lewis’s possible-world semantics, and reformulates the statistical potential outcome framework and its underlying assumptions using counterfactual conditionals. I discuss varieties of causally meaningful counterfactuals for the case of a finite number of treatments, and illustrate these using a simple set-theoretical framework. The paper proceeds to examine proximity relations between possible worlds, and discusses implications for empirical practice.

Suggested Citation

  • Kluve, Jochen, 2001. "On the Role of Counterfactuals in Inferring Causal Effects of Treatments," IZA Discussion Papers 354, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp354
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    References listed on IDEAS

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    Cited by:

    1. Włodzimierz Okrasa, 2012. "Statistics and Sociology: The mutually-supportive development from the perspective of interdisciplinarization of social research," Statistics in Transition new series, Główny Urząd Statystyczny (Polska), vol. 13(2), pages 365-386, June.
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    3. Daniel L. Millimet & John A. List, 2003. "A Natural Experiment on the ‘Race to the Bottom’ Hypothesis: Testing for Stochastic Dominance in Temporal Pollution Trends," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 395-420, September.
    4. Fertig, Michael, 2002. "Evaluating Immigration Policy Potentials and Limitations," IZA Discussion Papers 437, Institute of Labor Economics (IZA).

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    JEL classification:

    • B30 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - General
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • Z00 - Other Special Topics - - General - - - General

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