Poor economics and its missing mechanisms: The case for causal mediation

Kumar, Sunil Mitra and Venkatachalam, Ragupathy. 2023. Poor economics and its missing mechanisms: The case for causal mediation. Review of Development Economics, ISSN 1363-6669 [Article] (In Press)

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Abstract or Description

A key aim of studying development is to understand the factors that shape socioeconomic progress and explain inequalities. In empirical work, the predominant focus has been on posing these questions in the language of causal inference: how one or more variables effect an outcome of interest, with the estimation of Average Treatment Effects (ATE) becoming prioritized as the key objective. The ‘credibility revolution’ and the emphasis on randomized controlled trials in research on development has cemented this dominance, because randomization is well-suited to estimating the ATE. This paper argues that this dual dominance – ATE as main question of interest, and experiment as preferred method – is narrow and restrictive. We propose causal mediation frameworks as an alternative, which are routinely used in disciplines including epidemiology, psychology, sociology and political science where causal mechanisms are an equally important focus. We introduce key concepts and definitions of path-specific effects, and discuss identification and estimation approaches. We illustrate applications for development, and demonstrate how causal mediation brings the focus back to contextual knowledge and combine it with empirical rigour.

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Data sharing not applicable to this article as no datasets were generated or analysed during the current study.


Causal mediation, causal mechanisms, development economics

Departments, Centres and Research Units:

Institute of Management Studies
Institute of Management Studies > Structural Economic Analysis


1 July 2023Accepted
18 July 2023Published Online

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Date Deposited:

13 Jul 2023 11:22

Last Modified:

26 Feb 2024 13:05

Peer Reviewed:

Yes, this version has been peer-reviewed.



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