6 - Regression Estimators of Causal Effects

Summary

Regression models are perhaps the most common form of data analysis used to evaluate alternative explanations for outcomes of interest to quantitatively oriented social scientists. In the past 50 years, a remarkable variety of regression models have been developed by statisticians. Accordingly, most major data analysis software packages allow for regression estimation of the relationships between interval and categorical variables, in cross sections and longitudinal panels, and in nested and multilevel patterns. In this chapter, however, we restrict our attention to ordinary least squares (OLS) regression, focusing mostly on the regression of an interval-scaled variable on a binary causal variable. As we will show, the issues are complicated enough for these models, and it is our knowledge of how least squares models work that allows us to explain this complexity. In addition, nearly all of the insight that can be gained from a deep examination of OLS models carries over to more complex regression models because the identification and heterogeneity issues that generate the complexity apply in analogous fashion to all regression-type models.

In this chapter, we present least squares regression from three different perspectives: (1) regression as a descriptive modeling tool, (2) regression as a parametric adjustment technique for estimating causal effects, and (3) regression as a matching estimator of causal effects. We give more attention to the third of these three perspectives on regression than is customary in methodological texts because this perspective allows one to understand the others from a counterfactual perspective.