Counterfactuals and Policy Analysis in Structural Models

Understand

Evaluation of counterfactual queries (e.g., "If A were true, would C have been true?") is important to fault diagnosis, planning, determination of liability, and policy analysis.

• We present a method of revaluating counterfactuals when the underlying causal model is represented by structural models - a nonlinear generalization of the simultaneous equations models commonly used in econometrics and social sciences.
• This new method provides a coherent means for evaluating policies involving the control of variables which, prior to enacting the policy were influenced by other variables in the system.