• Title/Summary/Keyword: Heterogeneous Causal Effect

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Causal inference from nonrandomized data: key concepts and recent trends (비실험 자료로부터의 인과 추론: 핵심 개념과 최근 동향)

  • Choi, Young-Geun;Yu, Donghyeon
    • The Korean Journal of Applied Statistics
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    • v.32 no.2
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    • pp.173-185
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    • 2019
  • Causal questions are prevalent in scientific research, for example, how effective a treatment was for preventing an infectious disease, how much a policy increased utility, or which advertisement would give the highest click rate for a given customer. Causal inference theory in statistics interprets those questions as inferring the effect of a given intervention (treatment or policy) in the data generating process. Causal inference has been used in medicine, public health, and economics; in addition, it has received recent attention as a tool for data-driven decision making processes. Many recent datasets are observational, rather than experimental, which makes the causal inference theory more complex. This review introduces key concepts and recent trends of statistical causal inference in observational studies. We first introduce the Neyman-Rubin's potential outcome framework to formularize from causal questions to average treatment effects as well as discuss popular methods to estimate treatment effects such as propensity score approaches and regression approaches. For recent trends, we briefly discuss (1) conditional (heterogeneous) treatment effects and machine learning-based approaches, (2) curse of dimensionality on the estimation of treatment effect and its remedies, and (3) Pearl's structural causal model to deal with more complex causal relationships and its connection to the Neyman-Rubin's potential outcome model.

Government R&D Support for SMEs: Policy Effects and Improvement Measures

  • LEE, SUNGHO;JO, JINGYEONG
    • KDI Journal of Economic Policy
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    • v.40 no.4
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    • pp.47-63
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    • 2018
  • Government R&D grants for SMEs have risen to three trillion Korean won a year, placing Korea second among OECD nations. Indeed, analysis results have revealed that government support has not only expanded corporate R&D investment and the registration of intellectual property rights but has also increased investment in tangible and human assets and marketing. However, value added, sales and operating profit have lacked improvement owing to an ineffective recipient selection system that relies solely on qualitative assessments by technology experts. Nevertheless, if a predictive model is properly applied to the system, the causal effect on value added could increase by more than two fold. Accordingly, it is important to focus on economic performance rather than technical achievements to develop such a model.

The Effect of the Minimum Wage on Employment in Korea (최저임금이 고용에 미치는 영향)

  • Lee, Jungmin;Hwang, Seungjin
    • Journal of Labour Economics
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    • v.39 no.2
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    • pp.1-34
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    • 2016
  • We estimate the effect of an increase in the minimum wage on employment. In Korea, there is no exogenous variation in the minimum wage across regions or industries. One single minimum wage is applied to every worker in the whole country. In this paper, we exploit arguably exogenous variation in the proportion of workers affected by the minimum wage across worker groups defined by age, sex, education, tenure and establishment size. Using the data from the Survey on Labor Conditions by Type of Employment (SLCTE) from 2006 to 2014, we find that a 1% increase in the minimum wage decreases the full-time equivalent employment by about 0.14%. The effect is heterogeneous across workers; we find the effect is more adverse for female workers, low-educated, younger and older workers, workers with a shorter tenure, and workers in small- and medium-sized establishments.

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The Causal Relationship Test between Marine Business Cycle and Shipping Market Using Heterogeneous Mixed Panel Framework (해운경기변동과 선박시장에 대한 다차원 혼합 패널 인과성 분석)

  • Kim, Hyun-Sok;Chang, Myung-Hee
    • Journal of Korea Port Economic Association
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    • v.36 no.2
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    • pp.109-124
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    • 2020
  • Using panel data on freight rates and ship prices in the dry freighter market from January 2015 to December 2019, this study investigates the characteristics of shipping industry fluctuations. The analysis aims at two aspects of academic contribution. First, this study analyzes the relationship between shipping indicators and ship price based on separate dry-bulk ships, while the previous research considered the overall shipping index and weighted average ship prices. Second, the VAR model for the causality test is extended to a heterogeneous mixed panel model capable of limiting coefficients. There is a peak estimated by removing the cross-correlation problem, which is mainly raised in panel data analysis, using bootstrap estimation and solving the problem of information loss due to differences in non-stationary data. An empirical investigation of the causal relationship between economic fluctuations and ship price shows that the effect on the ship price from the freight is significant at the 1% level. This implies that there is a one-way relationship with demand in the shipping industry rather than a bilateral relationship.

Exploring the Role of Preference Heterogeneity and Causal Attribution in Online Ratings Dynamics

  • Chu, Wujin;Roh, Minjung
    • Asia Marketing Journal
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    • v.15 no.4
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    • pp.61-101
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    • 2014
  • This study investigates when and how disagreements in online customer ratings prompt more favorable product evaluations. Among the three metrics of volume, valence, and variance that feature in the research on online customer ratings, volume and valence have exhibited consistently positive patterns in their effects on product sales or evaluations (e.g., Dellarocas, Zhang, and Awad 2007; Liu 2006). Ratings variance, or the degree of disagreement among reviewers, however, has shown rather mixed results, with some studies reporting positive effects on product sales (e.g., Clement, Proppe, and Rott 2007) while others finding negative effects on product evaluations (e.g., Zhu and Zhang 2010). This study aims to resolve these contradictory findings by introducing preference heterogeneity as a possible moderator and causal attribution as a mediator to account for the moderating effect. The main proposition of this study is that when preference heterogeneity is perceived as high, a disagreement in ratings is attributed more to reviewers' different preferences than to unreliable product quality, which in turn prompts better quality evaluations of a product. Because disagreements mostly result from differences in reviewers' tastes or the low reliability of a product's quality (Mizerski 1982; Sen and Lerman 2007), a greater level of attribution to reviewer tastes can mitigate the negative effect of disagreement on product evaluations. Specifically, if consumers infer that reviewers' heterogeneous preferences result in subjectively different experiences and thereby highly diverse ratings, they would not disregard the overall quality of a product. However, if consumers infer that reviewers' preferences are quite homogeneous and thus the low reliability of the product quality contributes to such disagreements, they would discount the overall product quality. Therefore, consumers would respond more favorably to disagreements in ratings when preference heterogeneity is perceived as high rather than low. This study furthermore extends this prediction to the various levels of average ratings. The heuristicsystematic processing model so far indicates that the engagement in effortful systematic processing occurs only when sufficient motivation is present (Hann et al. 2007; Maheswaran and Chaiken 1991; Martin and Davies 1998). One of the key factors affecting this motivation is the aspiration level of the decision maker. Only under conditions that meet or exceed his aspiration level does he tend to engage in systematic processing (Patzelt and Shepherd 2008; Stephanous and Sage 1987). Therefore, systematic causal attribution processing regarding ratings variance is likely more activated when the average rating is high enough to meet the aspiration level than when it is too low to meet it. Considering that the interaction between ratings variance and preference heterogeneity occurs through the mediation of causal attribution, this greater activation of causal attribution in high versus low average ratings would lead to more pronounced interaction between ratings variance and preference heterogeneity in high versus low average ratings. Overall, this study proposes that the interaction between ratings variance and preference heterogeneity is more pronounced when the average rating is high as compared to when it is low. Two laboratory studies lend support to these predictions. Study 1 reveals that participants exposed to a high-preference heterogeneity book title (i.e., a novel) attributed disagreement in ratings more to reviewers' tastes, and thereby more favorably evaluated books with such ratings, compared to those exposed to a low-preference heterogeneity title (i.e., an English listening practice book). Study 2 then extended these findings to the various levels of average ratings and found that this greater preference for disagreement options under high preference heterogeneity is more pronounced when the average rating is high compared to when it is low. This study makes an important theoretical contribution to the online customer ratings literature by showing that preference heterogeneity serves as a key moderator of the effect of ratings variance on product evaluations and that causal attribution acts as a mediator of this moderation effect. A more comprehensive picture of the interplay among ratings variance, preference heterogeneity, and average ratings is also provided by revealing that the interaction between ratings variance and preference heterogeneity varies as a function of the average rating. In addition, this work provides some significant managerial implications for marketers in terms of how they manage word of mouth. Because a lack of consensus creates some uncertainty and anxiety over the given information, consumers experience a psychological burden regarding their choice of a product when ratings show disagreement. The results of this study offer a way to address this problem. By explicitly clarifying that there are many more differences in tastes among reviewers than expected, marketers can allow consumers to speculate that differing tastes of reviewers rather than an uncertain or poor product quality contribute to such conflicts in ratings. Thus, when fierce disagreements are observed in the WOM arena, marketers are advised to communicate to consumers that diverse, rather than uniform, tastes govern reviews and evaluations of products.

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