Counterfactuals and Policy Analysis in Structural Models

Evaluation of counterfactual queries (e.g., "If A were true, would C have been true?") is important to fault diagnosis, planning, de­ termination of liability, and policy analysis. We present a method for evaluating counter­ factuals when the underlying causal model is represented by structural models a nonlin­ ear generalization of the simultaneous equa­ tions models commonly used in econometrics and social sciences. This new method pro­ vides a coherent means for evaluating poli­ cies involving the control of variables which, prior to enacting the policy were influenced by other variables in the system.