BUSN5000 HW 7 Part A

10/30/23, 7 : 33 PM Assignment 7: Potential Outcomes Page 1 of 6 https://chris-cornwell.shinyapps.io/Assignment7/#section-a-short-answer A: Short Answer Correlation vs causation? Question 1: True or false. If True or false. If , , does not depend on does not depend on . False Correct! Question 2: True or false. If True or false. If causes causes , the conditional distribution of , the conditional distribution of given given must depend on must depend on . True Correct! Question 3: In the above DAG, In the above DAG, is a _____. is a _____. confounding variable Correct! Continue Potential outcomes Question 4: corr( x , y ) = 0 y x x y y x x Z Assignment Assignment 7: Potential 7: Potential Outcomes Outcomes A: Short Answer (https://chris- cornwell.shinyapps.io/Assignment7/#section- a-short- answer) B: Empirical Analysis Submission Start Over

10/30/23, 7 : 33 PM Assignment 7: Potential Outcomes Page 2 of 6 https://chris-cornwell.shinyapps.io/Assignment7/#section-a-short-answer You can’t observe the e ! ect of a treatment on an individual You can’t observe the e ! ect of a treatment on an individual because you can’t observe the ______ outcome. In this sense, because you can’t observe the ______ outcome. In this sense, causal inference is a ______ data problem. causal inference is a ______ data problem. counterfactual, missing Correct! Question 5: While individual treatment e ! ects are not observable, you may While individual treatment e ! ects are not observable, you may be able to identify the average treatment e ! ect (ATE), which is be able to identify the average treatment e ! ect (ATE), which is the di ! erence in average ______ outcomes. the di ! erence in average ______ outcomes. potential Correct! Question 6: Using the di ! erence in sample average outcomes for treated Using the di ! erence in sample average outcomes for treated and untreated individuals generally won’t work for estimating and untreated individuals generally won’t work for estimating the ATE because potential outcomes are not ______ of the ATE because potential outcomes are not ______ of treatment assignment, which results in ______ bias. treatment assignment, which results in ______ bias. independent, selection Correct! Recall the “switching equation”, which expresses observed outcomes in terms of potential outcomes: Using the switching equation, the di ! erence in the population average outcomes for the treated and untreated cases can be written as = (1 - ) + = + ( - ) . y i D i y 0 i D i y 1 i y 0 i y 1 i y 0 i D i E ( = 1) - E ( = 0) y i D i y i D i = E ( = 1) - E ( = 1) y 1 i D i y 0 i D i TERM 1 + (1) E ( = 1) - E ( = 0) y 0 i D i y 0 i D i TERM 2