Endogeneity and Causal Inference in Marketing

44 Pages Posted: 2 May 2022 Last revised: 10 May 2022

See all articles by Dominik Papies

Dominik Papies

University of Tuebingen - Faculty of Economics and Social Sciences

Peter Ebbes

HEC Paris - Marketing

Elea McDonnell Feit

Drexel University - Department of Marketing

Date Written: April 23, 2022

Abstract

In this chapter, we trace the history of how endogeneity came to be recognized as an important issue in marketing analysis and the widespread adoption of methods to address endogeneity. To quantify the rise of econometric methods for addressing endogeneity in marketing, we begin with a systematic literature review which counts the number of papers using one of seven causal inference methods: instrumental variables, latent instrumental variable, Gaussian copula, propensity score matching, difference in differences, regression discontinuity and synthetic controls. Based on this summary of the literature, we then trace the evolution of methods over three decades, discussing which papers were (in our view) important landmarks that had an influence on how the community viewed and handled endogeneity in the analysis of observational marketing data. After that, we conclude with a brief summary of the causal inference methods in common use today, which we hope marketing researchers can use as a "menu" to tackle their own endogeneity problems. We then briefly discuss the future of endogeneity in the field and present our conclusions.

Keywords: Endogeneity, Causal Inference, Instrumental Variables, Gaussian copula, Latent Instrumental Variable, propensity score matching, difference in differences, regression discontinuity, synthetic control

JEL Classification: B23, C36

Suggested Citation

Papies, Dominik and Ebbes, Peter and Feit, Elea McDonnell, Endogeneity and Causal Inference in Marketing (April 23, 2022). Available at SSRN: https://ssrn.com/abstract=4091717 or http://dx.doi.org/10.2139/ssrn.4091717

Dominik Papies

University of Tuebingen - Faculty of Economics and Social Sciences ( email )

Mohlstrasse 36
Tuebingen, Baden-Wuerttemberg 72074
Germany

Peter Ebbes

HEC Paris - Marketing ( email )

Paris
France

Elea McDonnell Feit (Contact Author)

Drexel University - Department of Marketing ( email )

United States

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