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Detecting Latent Heterogeneity

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  • Judea Pearl

Abstract

We address the task of determining, from statistical averages alone, whether a population under study consists of several subpopulations, unknown to the investigator, each responding to a given treatment markedly differently. We show that such determination is feasible in three cases: (1) randomized trials with binary treatments, (2) models where treatment effects can be identified by adjustment for covariates, and (3) models in which treatment effects can be identified by mediating instruments. In each of these cases, we provide an explicit condition which, if confirmed empirically, proves that treatment effect is not uniform but varies appreciably across individuals.

Suggested Citation

  • Judea Pearl, 2017. "Detecting Latent Heterogeneity," Sociological Methods & Research, , vol. 46(3), pages 370-389, August.
    • Handle: RePEc:sae:somere:v:46:y:2017:i:3:p:370-389
    DOI: 10.1177/0049124115600597
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    References listed on IDEAS

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    1. Joshua D. Angrist & Jörn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 3-30, Spring.
    2. James J. Heckman & Sergio Urzua & Edward Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 389-432, August.
    3. Joshua D. Angrist, 1998. "Estimating the Labor Market Impact of Voluntary Military Service Using Social Security Data on Military Applicants," Econometrica, Econometric Society, vol. 66(2), pages 249-288, March.
    4. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
    5. Pearl, Judea, 2015. "Trygve Haavelmo And The Emergence Of Causal Calculus," Econometric Theory, Cambridge University Press, vol. 31(1), pages 152-179, February.
    6. Judea Pearl, 2014. "Comment: Understanding Simpson's Paradox," The American Statistician, Taylor & Francis Journals, vol. 68(1), pages 8-13, February.
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