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Econometric models typically do not say anything about causality. For example, the coefficients in OLS are just correlation, i.e. one unit increase in X is asso
by noobhacker 8y ago
Econometric models typically do not say anything about causality. For example, the coefficients in OLS are just correlation, i.e. one unit increase in X is associated with $\beta$ increase in Y. Let's say that we regress "happiness" on "being married." It's impossible to tell which way does the causal relation flow, or if "happiness" and "being married" are both caused by a third factor altogether.
In contrast, causal models explicitly think about when we can claim that an effect is causal.
- xapata 8y agoWhile an econometrician is aware that statistics does not prove causality, the primary goal of econometrics is causal inference.
- wirrbel 8y agoyes and no. From the econometrics I have seen there is a heavy focus on finding correlations and at best argumentations whether such correlations are plausible causal relationships.
- xapata 8y agoGood scientific method suggests working in the opposite direction: first make a hypothesis, then test it. Working backwards from the statistical test to the hypothesis is... troublesome.