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The obvious case is that of the variable "labour income", which habitually requires us to predict counterfactual values, as income is only observed in the declared employment status.
The observed values of the employment rate are compared to their predicted (counterfactual) values based on a macro-econometric model estimated over a period of time preceding the implementation of the ISP.
Given that fire is a natural part of the earth system, we used a more data-driven approach to set counterfactual values for chronically affected WHO subregions.
As the data are simulated, the corresponding outcomes at these counterfactual values of the exposure can be calculated for each individual person.
Finally, it is worthwhile to mention that the perspectives of the extended DAGs are different from those of the twin network method, which has been developed to deal with counterfactual values in DAGs [ 2].
We explicitly allow for time-varying elements of (X k, U k ), k=1,2, and C12 by adding the subscript (t), use bold-face font to denote vectors, and use lower-case letters to denote observed and counterfactual values of random variables.
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This estimation would be based on the gap between observed deforestation and a counterfactual value.
21We used 4.5percentt as the counterfactual value for both phases, based on the following calculations.
For men aged 35 44 years old, the observed value of the employment rate in 2008q2 is 54.04 %, while the predicted, counterfactual value is 54.67 %.
A positive difference between the actual value of the employment rate and the predicted, counterfactual value is then interpreted as a positive impact of the ISP.
Although any prediction of deforestation rates (i.e. business-as-usual scenarios) is challenging, and any negotiated target is subject to obvious political influence, these two ways have been prioritirized so far to determine the counterfactual value.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com