Sensitivity Analysis
Explanation
Sensitivity analysis is a modeling technique, performed to analyze the effect of independent variables on a particular dependent variable under a given set of assumptions. Sensitivity analysis is used very often in the business world and in the field of economics. It is commonly used by financial analysts and economists and is also known as a what-if analysis.
In the world of Causal Inference, the approach of sensitivity analysis directly models confounding variables or selection biases.
It is especially useful in the study and analysis of a “Black Box Process” where the output is an opaque function of several inputs. An opaque function or process is one which, for some reason, can’t be studied and analyzed. For example, climate models in geography are usually very complex. As a result, the exact relationship between the inputs and outputs are not well understood.
An example of a situation where a 'What-If' analysis would be needed is:
"What would happen to my final grade if were to study 4 hours extra every day?"
Resource :
Identification, Inference and Sensitivity Analysis for Causal Mediation Effects
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