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Optimal Recovery for Causal Inference

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  • Ibtihal Ferwana
  • Lav R. Varshney

Abstract

Problems in causal inference can be fruitfully addressed using signal processing techniques. As an example, it is crucial to successfully quantify the causal effects of an intervention to determine whether the intervention achieved desired outcomes. We present a new geometric signal processing approach to classical synthetic control called ellipsoidal optimal recovery (EOpR), for estimating the unobservable outcome of a treatment unit. EOpR provides policy evaluators with both worst-case and typical outcomes to help in decision making. It is an approximation-theoretic technique that relates to the theory of principal components, which recovers unknown observations given a learned signal class and a set of known observations. We show EOpR can improve pre-treatment fit and mitigate bias of the post-treatment estimate relative to other methods in causal inference. Beyond recovery of the unit of interest, an advantage of EOpR is that it produces worst-case limits over the estimates produced. We assess our approach on artificially-generated data, on datasets commonly used in the econometrics literature, and in the context of the COVID-19 pandemic, showing better performance than baseline techniques

Suggested Citation

  • Ibtihal Ferwana & Lav R. Varshney, 2022. "Optimal Recovery for Causal Inference," Papers 2208.06729, arXiv.org, revised Dec 2023.
  • Handle: RePEc:arx:papers:2208.06729
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    References listed on IDEAS

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    1. Susan Athey & Guido W. Imbens, 2017. "The State of Applied Econometrics: Causality and Policy Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 3-32, Spring.
    2. Susan Athey & Mohsen Bayati & Nikolay Doudchenko & Guido Imbens & Khashayar Khosravi, 2021. "Matrix Completion Methods for Causal Panel Data Models," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 116(536), pages 1716-1730, October.
    3. Zhao Qingyuan & Percival Daniel, 2017. "Entropy Balancing is Doubly Robust," Journal of Causal Inference, De Gruyter, vol. 5(1), pages 1-19, March.
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