Causal Decision Making and Causal Effect Estimation Are Not the Same... and Why It Matters
DSA External Course - 2021
April 8, 2021
Over the past two decades, causal decision making (CDM) at scale has become a routine part of business, and increasingly CDM is based on statistical models and machine learning algorithms. For example, businesses target offers, incentives, and recommendations algorithmically with the goal of affecting consumer behavior. Not surprisingly, recently we have seen an acceleration of research related to CDM and to causal effect estimation (CEE) using machine learned models. This article highlights an important perspective: CDM is not the same as CEE, and counterintuitively, accurate CEE is not necessary for accurate CDM. Our experience is that this is not well understood by practitioners nor by most researchers. Technically, the estimand of interest is different, and this has important implications both for modeling and for the use of statistical models for CDM. We draw on recent research to highlight three of these implications. (1) We should consider carefully the objective function of the causal machine learning, and if possible we should optimize for accurate “treatment assignment” rather than for accurate effect-size estimation. (2) Confounding does not have the same effect on CDM as it does on CEE. The upshot here is that for supporting CDM it may be just as good or even better to learn with confounded data as with unconfounded data. Finally, (3) causal statistical modeling may not be necessary at all to support CDM, because there may be (and perhaps often is) a proxy target for statistical modeling that can do as well or better. This observation helps to explain at least one broad common CDM practice that seems “wrong” at first blush—the widespread use of noncausal models for targeting interventions. The last two implications are particularly important in practice, as acquiring (unconfounded) data on both “sides” of the counterfactual for modeling can be quite costly and often impracticable. Our perspective is that these observations open up substantial fertile ground for future research. Whether or not you share our perspective completely, we hope we facilitate future research in this area by pointing to related articles from multiple contributing fields, including two dozen articles published the last three to four years.