Linear regression for causal inference
Linear regression models are employed to estimate the causal effect of one or more independent variables (your treatments or interventions) on a dependent variable (the outcome). This section delves into the application of linear regression for causal inference, highlighting its assumptions, methodologies, and practical considerations.
The theory
Linear regression models predict the value of a dependent variable based on the linear combination of one or more independent variables. Here is the equation for this model:
(1)
In this context, is the dependent variable we want to predict. The independent variables are . The intercept represents the value of when all values are zero.
The coefficients show how changes in each affect , keeping other variables constant. Each coefficient indicates the impact of a unit change in its corresponding on .
These coefficients are crucial as they quantify the relationship between...