Chapter 15 Eight Myths About Causality and Structural Equation Models

Abstract Causality was at the center of the early history of structural equation models (SEMs) which continue to serve as the most popular approach to causal analysis in the social sciences. Through decades of development, critics and defenses of the capability of SEMs to support causal inference have accumulated. A variety of misunderstandings and myths about the nature of SEMs and their role in causal analysis have emerged, and their repetition has led some to believe they are true. Our chapter is organized by presenting eight myths about causality and SEMs in the hope that this will lead to a more accurate understanding. More specifically, the eight myths are the following: (1) SEMs aim to establish causal relations from associations alone, (2) SEMs and regression are essentially equivalent, (3) no causation without manipulation, (4) SEMs are not equipped to handle nonlinear causal relationships, (5) a potential outcome framework is more principled than SEMs, (6) SEMs are not applicable to experiments with randomized treatments, (7) mediation analysis in SEMs is inherently noncausal, and (8) SEMs do not test any major part of the theory against the data. We present the facts that dispel these myths, describe what SEMs can and cannot do, and briefly present our critique of current practice using SEMs. We conclude that the current capabilities of SEMs to formalize and implement causal inference tasks are indispensible; its potential to do more is eve