This paper presents the econometric approach to causal modeling. It is motivated by policy problems. New causal parameters are defined and identified to address specific policy problems. Economists embrace a scientific approach to causality and model the preferences and choices of agents to infer subjective (agent) evaluations as well as objective outcomes. Anticipated and realized subjective and objective outcomes are distinguished. Models for simultaneous causality are developed. The paper contrasts the Neyman-Rubin model of causality with the econometric approach.
This paper was presented at the ISI Conference in Seoul, Korea, on August 27, 2001. It has benefited from discussions with Jaap Abbring, Pedro Carneiro, Steve Durlauf, Seong Moon, Salvador Navarro, T.N. Srinivasan, John Trujillo, Ed Vytlacil, Jordan Weil and Yu Xie; and comments by the editor, Eugene Seneta, and two anonymous referees. This research was supported by NIH R01-HD043411, NSF SES-0241858 and the Geary Institute, University College Dublin, Ireland. The views expressed in this paper are those of the author and not necessarily those of the funders listed here nor of the National Bureau of Economic Research.