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Hi , I have already run a whole bunch of OLS and found the following

Regress P= B1*L+e_1, found b1<0

Regress X= B2*L+e_2, found b2>0

Regress X= B3*P+e_3, found b3<0

I want to build a case with complex causal structure, in which there are two channels that L positively affects X.

1.Reducing P increases X

2.L positively affects X on its own

3.In addition, L positively affects X through the effect that increasing L reduces P, and we know reducing P increases X, thus this is the second channel that L positively affects X.

Two questions.

A. What OLS or other type of regression equations[I guess it takes more than 1 equation] should I run to prove my case, ie, to prove (if not possible to prove, strongly suggest) this whole system of causal strucuture?

B. What regression diagnostics should I use in SAS to show my logic behind the causal strcuture (L increases X through 2 channels )are ok?

Thanks.

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maybe stats.stackexchange.com is a better forum for this question? –  Suvrit Feb 11 '12 at 23:52
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1 Answer

You want to make a structural equation model.

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