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Why Functional Form Matters: Revealing the Structure in Structural Models in Econometrics

Published online by Cambridge University Press:  01 January 2022

Damien Fennell
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Abstract

This paper argues that econometricians’ explicit adoption of identification conditions in structural equation modelling commits them to read the functional form of their equations in a strong, nonmathematical way. This content, which is implicitly attributed to the functional form of structural equations, is part of what makes equation structural. Unfortunately, econometricians are not explicit about the role functional form plays in signifying structural content. In order to remedy this, the second part of this paper presents an interpretation of the functional form based on Herbert Simon's definition of causal order. This begins to set out just what the functional form of structural equations represents.

Type
Philosophy of Probability and Statistics
Information
Philosophy of Science , Volume 74 , Issue 5: Proceedings of the 2006 Biennial Meeting of the Philosophy of Science Association. Part I: Contributed Papers. Edited by Cristina Bicchieri and Jason Alexander , December 2007 , pp. 1033 - 1045
Copyright
Copyright © The Philosophy of Science Association

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Footnotes

‡

I would like to thank Nancy Cartwright and attendants at UCSD Graduate Seminar 2006 for helpful comments. I also want to thank the AHRC for supporting the research for this paper.

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