Causal Analysis After Haavelmo.
Haavelmo's seminal 1943 and 1944 papers are the first rigorous treatment of causality. In them, he distinguished the definition of causal parameters from their identification. He showed that causal parameters are defined usinghypotheticalmodels that assign variation to some of the inputs determining outcomes while holding all other inputs fixed. He thus formalized and made operational Marshall's (1890)ceteris paribusanalysis. We embed Haavelmo's framework into the recursive framework of Directed Acyclic Graphs (DAGs) used in one influential recent approach to causality (Pearl, 2000) and in the related literature on Bayesian nets (Lauritzen, 1996). We compare the simplicity of an analysis of causality based on Haavelmo's methodology with the complex and nonintuitive approach used in the causal literature of DAGs-the "do-calculus" of Pearl (2009). We discuss the severe limitations of DAGs and in particular of thedo-calculusof Pearl in securing identification of economic models. We extend our framework to consider models for simultaneous causality, a central contribution of Haavelmo. In general cases, DAGs cannot be used to analyze models for simultaneous causality, but Haavelmo's approach naturally generalizes to cover them.
The University of Chicago, Department of Economics, 1126 E. 59th St. Chicago, IL 60637 (773) 702-0634.
James
J
Heckman
The University of Chicago, Department of Economics, 1155 E. 60th St., Room 215, Chicago, IL 60637 (773) 702-9436.
Rodrigo
R
Pinto
Causality; Directed Acyclic Graphs; Do-Calculus; Identification; Simultaneous Treatment Effects