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Table Of Contents
Causal Inference with Bayesian Networks
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In this section we see how we can use standardization to estimate the causal effect. We will use standardization with a linear regression model to estimate the ATE of the Lalonde dataset.
As mentioned before, the presence of confounders doesn’t allow us to estimate the ATE of the Lalonde dataset since the treatment and control groups are systematically different. This is where standardization can help us. We can statistically control the confounders by including them in a linear regression model. Linear regression allows us to isolate the relationship between the treatment and the outcome groups by keeping all the confounders constant. First, we need to create a multiple linear regression model in which the dependent variable is the outcome (Y) and the regressor variables are the treatment variable (T) and the covariates (X):
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Here, τ and βi are the model’s coefficients, and ε...