Stolzenberg, R. M. 1980. “The Measurement and Decomposition of Causal

The Measurement and Decomposition of Causal Effects in Nonlinear and Nonadditive Models
Author(s): Ross M. Stolzenberg

Source: Sociological Methodology, Vol. 11 (1980), pp. 459-488
Published by: Wiley
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THE MEASUREMENT AND
DECOMPOSITION OF CAUSAL
EFFECTS IN NONLINEAR AND
NONADDITIVE MODELS
Ross M. Stolzenberg
UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN
While considerable attention has been directed to linear

additive models in sociology, nonlinear and nonadditive models
have been neglected. The infrequent use of nonlinear and non-
additive models is unfortunatesince so much thinkingin sociology
implies interactions among variables or nonlinearities in their
Thanks for useful advice to Alan Agresti, Woody Beck, Richard Berk,
John Fox, Robert Hauser, Mike Hout, and Seymour Spilerman. Thanks to the
National Science Foundation for essential support (Grant SOC77-21265). Opin-
ions expressed herein are those of the author, who bears all responsibilityfortheir
accuracy.
459
460 ROSS M. STOLZENBERG
effects.But the relative rarityof nonlinear and nonadditive models

is also understandable: Although many textbooks and reference
worksprovide lucid discussionsof how to estimate the parameters of
nonlinear and nonadditive models, I know of no book or article that
explains how to interpret these parameters as measures of causal
effector how to compare them to the coefficientsof the linear
additive equations which appear with some regularityin sociologi-
cal research.
The purpose of this chapter is to present a unified set of
methods forcalculating causal effectsin nonlinear and nonadditive
models. The methods I present are a generalization of methods
implicitly used to obtain the measures of causal effect in path
analysis. I also presentmethods fordecomposing causal effectsinto
indirectand directcomponents when models involve more than one
(nonlinear or nonadditive) equation. I combine my presentationof
these statisticaltechniques with a discussion of the verbal formula-
tions that correspond to various types of nonlinear/nonadditive
equations.
MEASURING CAUSAL IMPACT
According to conventional definitions,ifone variable causes

another, then variations in the firstvariable will tend to produce
variations in the second. Thus the causal effectof one variable on
another is normallydefined as the extentto which change in the first
produces change in the second. This definition is usually opera-
tionalized with "rate-of-change"measures ofcausal effectthat state
the rate of change in the dependent variable per change in the
causal (or independent) variable.1 Mathematically, rate-of-change
measures are derivatives(when there is only one causal variable) or
partial derivatives (when there is more than one causal variable):
The derivative dY/dX is the rate at which a dependent variable Y
changes per change in independent variable X. The partial deriva-
tive a Y aX is the rate at which dependent variable Y changes per
1Rate-of-change measures are usually contrastedwith variance-explained

measures. For example, path coefficients,regressioncoefficients,and beta weights
are all rate-of-changemeasures. Pearsonian correlations, R2 statistics, and coeffi-
cients of alienation are all variance-explained measures.
MEASUREMENT AND DECOMPOSITION OF CAUSAL EFFECTS 461
change in independent variable X, net of the effectsof other varia-

bles in the model that influence Y. Pictorially, the derivative is the
slope of the graph relatingvalues of Y to values ofX, and the partial
derivative is the slope of the n-dimensionalsurfacerelatingvalues of
Y to values of the n variables that cause Y in the model. Thus in the
linear additive case, where the graph relating Y and X is a straight
line, dY/dX (or a YlaX) is merelythe coefficientforX in the equa-
tion that describes the graph.
As straightforwardas rates of change may seem, they vary
considerably in actual use. The source of this diversityis the choice
of scales on which changes in Y and changes in X are measured. For
example, changes in X and Y can be measured in the natural units
of these variables, or as proportional changes, or in standard devia-
tionsof the variables. Further,changes in X can be measured on one
type of scale and changes in Y can be measured on a differentscale.
Table 1 listsvarious combinations of these scales and the commonly
TABLE 1
Some Measures of Causal Effect of X on Y
Scale for
Measuring Metric for
Changes in X Measuring Common Name
(Independent Changes in Y for Measure
Variable) (Dependent Variable) of Effect
Natural Natural Unstandardized

effect,metric
effect,or raw
effect
Natural Proportion Rate of return
to Xb
Proportion Proportion Point elasticity
of Y with
respect to X
Standardizeda Standardizeda Standardized
effect,beta
aThat is, normed to zero mean and a unit standard deviation.

b See text for full details of rates of return.
NOTE: In a personal communication, Seymour Spilerman has suggested that it may
be useful to measure the causal variable on a standardized scale and to measure the
dependent variable on a proportional scale. Other combinations of scales are
possible, too, and may be sensible in certain applications.
used name for the (partial) derivative of Y with respect to X in

several cases.
Economists tend to use elasticities and rates of returnmore
than sociologists,and sociologists tend to use standardized effects
more than economists, but, aside from the obvious connection
between investmenttheoryand rates of return,disciplinary differ-
ences in these practices seem to be more the result of custom than
anythingelse.2 Unless theyare motivated by a particular theoretical
concern, researchers in both disciplines use the standardized or
percentage metric primarily to skirt problems of interpretation
when one or both variables are measured according to a scale that
has no intuitivelymeaningful unit, as in the case of many attitude
scales used in surveyresearch,or when scales of differentindepend-
ent variables are not directlycomparable, as when workis measured
in hours and income is measured in dollars.
The relationshipsamong unstandardized effects,standard-
ized effects,point elasticities, and rates of return are straightfor-
ward: In the notation of partial derivatives, the change in Y per
change in X can be writtenas a Y aX, where a Y is the change in Y
and aX is the change in X. (This is a gross simplificationof the
mathematical concepts, but not a distortion of them.) Thus the
unstandardized effect is a YlaX. To measure changes in one of
these variables in standardized units, divide it by the variable's
standard deviation. Thus the standardized effect of X on Y is
(a Y uY)I(aXaX) = aY/aX aXY. X Similarly,to measure change
in one of thesevariables in proportionalterms,divide the change in
the variable by the initial value of the variable. Thus the elasticity
of Y with respect to X is (a Y Y)(aXIX) = aYax X Y and the
rate of return to Y is (aY Y) aX = aY aX- I/Y.
To give an empirical example, consider the model
Y = 4 + 3X + 2Z + -, where Y,X, and Z are variables and - is an
error term with an expectation of zero. Suppose also that the
standard deviation of X is 2 and the standard deviation of Y is 12.
2 The rate of returnis sensible

only when Y is measured on a scale with a
meaningful zero point. The elasticity is sensible only when both X and Y are
measured on scales with meaningful zero points. However, the standardized effect
can be used with variables measured on scales having arbitrary zero points and
arbitrary units.
The unstandardized effectof X on Y is 3. To get the standardized

effect,we multiply 3 by 2 (the standard deviation of X) and divide
by 12 (the standard deviation of Y), obtaining a value of 0.5. To
calculate the point elasticity,we must choose values of X and Y.
When X = 7 and Y = 4, the elasticity equals the unstandardized
effectmultiplied by 7/4, or 3(7/4) = 5.25, indicating a rate of
change of 5.25 percent in Y per 1 percent change in X. Similarly,
calculation of the rate of return requires choice of a value of Y.
When Y = 6, the rate of returnis 3(1/6) = 0.5, indicating a rate of
change of 50 percent in Y per unit change in X. When Y = 15, the
rate of return = 3(1/15) = 0.2, indicating a 20 percentchange in Y
per unit change in X. Note that the elasticityvaries with the values
of X and Y in this example, that the rate of returnvaries with the
value of Y,and that the standardized and unstandardized effectsare
constant over the range of X and Y. Later in this chapter I discuss
models in which the point elasticityor the rate of returnis constant
and the standardized and unstandardized effectsvary with the
values of X and/or Y.
EFFECTS IN COMMON CAUSAL RELATIONSHIPS
I startwith simple, commonly used specificationsand move

on to more complicated models that are not oftenseen in sociology
but nonetheless are directly relevant to frequently used verbal
formulationsof causal relations.
Linear Additive Models
Most statistical analysis in sociology treats relationships
among variables as linear and additive. By additive,I mean that the
effectof one variable on a second variable does not vary according
to the values of a third variable. By linear,I mean that the rate at
which changes in one variable are produced by changes in another
variable does not itselfvary with the values of one or both of the
variables. (Mathematically, linearity in the relationships between
two variables Y and X means that the partial derivative a Y aX is
constant. Additivity means that, where Z is any other variable,
a2Y aZaX = 0.) The great popularity of linear additive models can
be attributed to two factors.First, an enormous range of relation-
ships among variables studied in the social sciences are, in fact,

linear and additive, and many other relationships do not depart
fromlinearityand additivity so much that great harm is done by
treatingthem as if they were linear and additive. And, second, the
parameters of linear additive equations usually can be estimated
easily and inexpensivelywith ordinaryleast-squaresregression,and
these parameters are simple to interpret.The interpretabilityof
parameters can be seen by noting that the general formof a linear
additive equation is
I
Y= a + ZbiX +e (1)
i=l
where Y is the dependent variable, a is a constant,and the b 's are

parameters, the Xi's are variables that cause Y, and - is the error
term. For any Xi in this equation, the partial derivative a YaXi is
equal to bi.
Parabolas and Higher Order Polynomials

Except forthe linear additive specification,the parabola is
probably the mostuseful mathematical functionin causal modeling
of social phenomena. The general functionalformof the parabola is
Y = a + b1X + b2X2 + _, but since social science causal models
generally involve several independent variables, we can generalize
the function to
I
Y = a + biX + b2X2+ ciZ + (2)
i=l
where a, the b's, and the c's are parameters,where X, Y, and the Z2's
are variables, and where E is the error.The usefulnessof the parab-
ola grows out of the many shapes it can assume, dependent only on
the values of b1 and b2. Figure 1 shows some of those shapes.
Part of the tremendousappeal of the parabolic functionfor
social science researchstemsfromthe factthat itsparameterscan be
estimated with ordinary least-squares regression.Thus to fitEqua-
tion (2) one would merely create a new variable equal to X2 and
then regressY on X, X2, and the Zi's. The t statisticforX2 would be
Figure 1. Shapes assumed by Y = a + b1X + b2X2under varyingvalues of a, bl, and b2.
16 - 16
12/ 12 b1 5
b2 - 0.5
Y 8- Y 8
~a =0
b= 0
4- b2=0. 2 4-
0 0
0 4 8 12 16 0 4 8 12 16
x x
16 16
12 -12-
a = 8.00
b, = 0.00
Y 8- 8/ Y b2= -0.05
a =12.5
b= -5
4_ b2= 0.5 4\
o 0
0 4 8 12 16 0 4 8 12 16
x x
16 -
a = 0.000
= 1.000
b,
12 - b2 = - 0.031
Y 8-
4-
0
0 4 8 12 16
x
used to test the null hypothesisthat the coefficientforX2 is zero. If

that coefficientis zero, then the relationship between Y and X is
either linear or else of a nonparabolic, nonlinear form. But if the
coefficientfor X2 is significantlydifferentfrom zero, then the
researcher has evidence that the relationship between Y and X is
nonlinear and that this relationship is fittedmore accurately by a

parabola than by a straightline. Onceonehas madethisconclusion, the
of
coefficients X and X2 no longer
have separate must
interpretations-they be
consideredsimultaneously.3As with linear relationships,the effectof X
on Y is measured by the partial derivative a YlaX. In Equation (2),
according to the rules of calculus, aY/aX is equal to b1 + 2b2X.
Notice that the effectof X on Y in the parabolic case is a linear
functionof X. Thus the effect ofX on Y changes by 2b2units per unit
change in X.
For an example of parabolas, I turn to Rees and Schultz's
(1970, p. 136) analysis of hourly earnings. Rees and Schultz were
interestedin findingthe effectof workers'age on earnings,but they
hypothesized that (1) several factorsother than age affectearnings,
(2) earnings increase with age during the firstpart of men's careers
but decrease with age in the second part, and (3) the processes
affectingearningsvaryfromone occupation to another.To allow for
occupational differencesin the earnings process,Rees and Schultz
constructedseparate earnings models forincumbents of each occu-
pation they examined. To allow foreffectsof variables besides age
that they hypothesized to affectearnings,theyalso included in the
model seniority,years of schooling,a measure ofjob-related experi-
ence and training,and distance from the employee's home to his
job. And to allow forthe nonlinear effectsof age on earnings,they
included age and age squared. They did not suspect interactions
among any variables, so theyused an additive model and estimated
parameters by regressingearnings on age, age squared, and the
other variables just mentioned. Applying their model to the earn-
ings of maintenance electricians,theyobtained a coefficientforage
(in years) of 0.031 and a coefficientof -0.0032 forage squared. By
applying the formula for the partial derivative, we can use these
results to find the unstandardized effectof age on earnings at
differentages: At an age of X years, the effectof age on earnings is
0.031 + 2(-0.0032)X. The effectof age on earningsat various ages
is shown in Table 2. Notice in Table 2 how the effectof age on
earnings declines and ultimatelybecomes negative as age increases.
3It has been suggested that the coefficient for X2 in the parabolic
function can be interpreted as a measure of convexity or concavity. Such an
interpretationis possible, but I findit more straightforwardto calculate the partial
derivative in the usual way and investigate its changes over the range of X.
TABLE 2
Results from Rees and Schultz's Parabolic Model of Hourly Earnings
Age
(Years) Metric Effect of Agea
20 0.0182
30 0.0118
40 0.0054
45 0.0022
50 -0.0010
60 -0.0074
70 -0.0138
aExpressed as change in hourly earnings, in dollars, per additional year of age.
The discussion of effectsin parabolic models has assumed

that all variables were measured in their natural (unstandardized)
metricsand that b1and b2are unstandardized regressioncoefficients.
However, it is sometimes useful to measure causal effectsaccording
to a standardized
metric.For a linearfunction,standardized effectsare
just the standardized regressioncoefficientsof the regressionequa-
tion that are calculated as an intermediate step in most linear
regressionalgorithms.To findthe standardized effectwhen dealing
with a parabolic function,we adjust the numeratorand denomina-
tor of the partial derivative to measure Y and X in standardized
units. Applying the usual arithmetic,we get
(a/Y Y)(axlax) = aY axax/ Y
Thus, at a given value of X, the standardized effectof X on Y is
obtained by firstcalculating aY aX from the formula aY/aX =
b1 + 2b2X and then multiplying the result by the ratio of the
standard deviation of X divided by the standard deviation of Y.
Notice that the standardized effectvaries according to the value
of X.
In the course of presenting the findingsfrom a parabolic
model, the researcherprobably will wish to evaluate the metricand
standardized effectsof X on Y at several differentvalues of X. These
values may be chosen fortheir substantive significanceor because
they have some intuitive appeal. For example, in the analysis of
effectsof schooling on earnings,one may wish to calculate the effect
of schooling on earnings at the sample mean of the schooling
distributionand at 6, 9, and 12 years of schooling. Or, in another

analysis, one may wish to calculate the effectof X on Y at the
sample mean ofX and at 1 standard deviation above and 1 standard
deviation below the mean.
The calculation of effectsforparabolic models is merely a
special case of procedures forcalculation of effectsforhigher-order
polynomials. Thus, in the followinggeneral formof the Ith-order
polynomial specification
I J
Y= a + biXi + ZcjZ+ E
i=1 j=1
the partial derivative a Y/aX is given by the following formula:
I
a Y/aX EibiXi-1
i=l
where Y is the dependent variable, X and the Z, s are independent

variables, - is the error term, and a is a constant. Once a Y/aX is
calculated fora given value of X, standardized effects,point elas-
ticities,and rates of returncan be calculated easily by multiplying
aY/aX by uXlaY, by XIY, or by 1/Y.
The Logarithmic Function
Another common method in analysis of nonlinear effectsis
the logarithmic function. The general form of the logarithmic
functioncommonly used in additive models is Y = a + b ln(X) +
Ei ciZi + -, where X and the Zi's are variables in the model
that cause Y, where a, b, and the ci's are parameters, where In is
the natural logarithmic function,and where - is the error. Two
examples of the sorts of relationships that can be fittedwith the
logarithmicfunctionare shown in Figure 2. Looking at the solid line
in that figure,notice that the logarithmicfunctioncan be used when
the effectof X on Y is always positive (that is, increases in X lead to
increasesin Y) but is strongerforlow values ofX than forhigh values
of X. Looking at the dashed line, notice that the logarithmic
functioncan also be used to fitsituations in which the effectofX on
Y is negative but is strongerat low values ofX than at high values of
X. These situationscorrespondto the notion of decreasing marginal
effectsof X on Y.
Figure 2. Two logarithmic functionsof X.
5-i
4-1
3- y= ln(X)
1- ~~~~~~~y- 3- ln(X)
-6 l I I I I I I I 1-
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
An advantage of the logarithmic specification is that it is

simple to use. So long as Xassumes only positive values (logarithms
are defined only fornumbers greater than zero), application of the
logarithmic function requires only that one take the log of X and
then treat ln(X) (rather than X) as a variable in ordinary least-
squares analysis. The unstandardized coefficientof ln(X) can be
interpreted as the rate of change of Y per unit change in the
logarithm ofX. Clearly, the standardized coefficientforln(X) can be
interpretedas the number of standard deviations of change in Y
that occur per standard deviation of change in the logarithm of X.
But such interpretationsare somewhat impractical-few variables
in real life are measured on logarithmicscales, so people have little
intuitivesense of how big units of ln(X) are, even if they are quite
familiar with the units of X. (Consider, forexample, how many log
years of schooling one must complete in order to obtain a high
school diploma.) However, the effectof X on Y in a logarithmic
specification can be meaningfullyinterpretedby turningagain to
partial derivatives. In the function Y = a + b ln(X) + EciZi + E,
the partial derivative of Y with respect to X, a Y$IJX,is b/X. Using
thisformula,one can calculate easily the unstandardized effectofX
on Y at any given value of X. And, as in the case of the parabola,

one can calculate the standardized effectof X on Y at any value of
X by firstcalculating the unstandardized effectat that value and
then multiplyingit by aX/aY. But perhaps even more useful is the
fact that since aYlax= bIX, then aY/(ax/x) = aYlax*x =
bIX *X = b. Thus, when changes in X are measured as proportions
and when changes in Y are measured in the usual metric of Y, the
effectof X on Y is preciselyequal to the unstandardized regression
coefficientfor ln(X).
For an example of the use of the logarithmicspecification,I
turn to Blau and Schoenherr's (1971, pp. 63-64) analysis of the
effectsof agency size (that is, number of employees) on the number
of hierarchical levels in agency organization. Blau and Schoenherr
regressthe number of hierarchicallevels on the log oforganizational
size and measures of automation and the division of labor in the
agency. They find a standardized coefficientof 0.75 for the log of
agency size and find coefficientsof -0.11 and 0.16 fordivision of
labor and automation, respectively.No doubt because the log ofsize
has so little intuitivemeaning, they conclude only that size has the
"dominant" effecton the number of hierarchical levels (p. 73).
However, we can be considerably more precise by calculating the
partial derivative of Y (number of levels) with respect to X (size).
The unstandardized coefficientof ln (size) is 4.36. Applying
the formulaforthe partial derivativeof Y with respectto X, we find
that the unstandardized effectof size (not the logarithm of size) is
4.36 divided by the size of the organization. Blau and Schoenherr
reportthat the mean of size is 1,195 persons; thus at the mean the
unstandardized effectof size on levels is 0.0036 (= 4.36 . 1195)
levels per additional person. But perhaps the most intuitively
appealing measure of the effectof size on number of levels is the
change in levels per proportional change in Y. The coefficientof
4.36 forln (size) indicates a rate of change of0.0436 (= 4.36 -100)
levels per change of 1 percent in organization size at anyvalue ofsize.4
4 The reader should note that I reconstructed the metric coefficientfor

log10(size) from the standardized coefficientfor log10(size) reported by Blau and
Schoenherr (1971) and then calculated the coefficientfor ln(size) by multiplying
the coefficientforlog1o(size) by log1o(e), where e is the base of natural logarithms.
Note also that a change in size of 100 percent will not necessarilyproduce a change
of 4.36 levels since the base of the percentage increases as size increases.
Nonadditive Models and Nonlinear/Nonadditive Models
A nonadditive model specifiesthat the effectof one variable

(X) on another variable (Y) varies according to the values of one or
more variables. Thus, forexample, when one observesthat the effect
of educational attainment on occupational achievement is stronger
forwhites than forblacks, one is observing a nonadditive relation-
ship. And if one hypothesizesthat the effectof a child's IQ on her
verbal achievement varies according to her teacher's instructional
skills, one is concerned also with a nonadditive relationship. And,
for a final example, when one hypothesizes that the effect of
schooling on earnings varies with an individual's length of labor
marketexperience, one is hypothesizinga nonadditive relationship
between schooling and experience in determiningearnings.
When one deals with causal models of nonadditive rela-
tionships, the key issues are essentially the same as in any other
causal modeling situation: One must finda mathematical function
that corresponds to theoretical notions of how variables in the
model affectthe dependent variables, and one must find an accu-
rate, understandable measure of the way in which causal variables
affectthe dependent variables. We can use the same strategyto
measure causal effectsin nonadditive models that we used with
linear and nonlinear additive models: In nonadditive models, as in
other models, the causal effectof a variable X on another variable Y
is measured by the partial derivative of Ywith respectto X, aY/ X,
which gives the rate of change in Y per unit in X. The only compli-
cation in the nonadditive case is that aY/aX is a function of the
other variables in the model which interactwith X. Indeed, I define
nonadditive models as those in which a Y/I9Xis a functionof one or
more other causal variables. Discussion of causal effectsin non-
additive models is simpler ifit is grounded in the context of specific
types of verbal formulations and corresponding mathematical
functions.So I now turn to brief discussions of three very general
types of nonadditive models.
Models InvolvingFacilitationand Inhibition. It is common to
talk of facilitation and inhibition in sociology and complement-
arities in economics-situations in which the effectof a variable
(X1) on another variable (Y) increases or decreases according to
values of a thirdvariable (X2). Yet it is oftenthe case that thereare
variables in the model which are neitherhypothesizednor observed

to facilitateor inhibit the effectsof othervariables. In such cases the
following functionmay prove to be useful:
Y = a + b1X1+ b2X2+ b3X1*X2 + > ciZi + E (3)
where the Xi's and the Zi's are causal variables, Y is the dependent
variable, ? is the error,and other symbols are parameters. In prac-
tice, this equation is estimated by creating a variable equal to the
product of X1 and X2 and then regressingY on Xl, X2, X1 - X2, and
the Zi's. The null hypothesis that b3 = 0 may be tested by the t
statistic. If the coefficientfor the product X1 X2 A is significantly
differentfromzero, then the researcherhas evidence that the effects
of X1 and X2 on Y are nonadditive. Withnonadditivity neither
present,
thecoefficientforX1 northecoefficient meaningfully
forX2 can beinterpreted
without simultaneously considering fortheproductterm.Notice
thecoefficient
that this situation is directlyanalogous to the parabolic nonlinear
case-once it is determined that the coefficientforA2 is nonzero,
then the coefficientforX has no meaningful causal interpretation
apart fromthe coefficientforX2. We accomplish this simultaneous
consideration by turning once again to partial derivatives. In
Equation (3) the effectofX1 on Yis given by aY/aA1 = b1 + b3X2,
and the effectof X2 on Y is given by a YlaX2= b2 + b3X1. Notice
that Zi's do not enter into the formulasforthe effectsof X1 and X2
on Y; this is the mathematical equivalent of saying that the Zi's
interact with neither X1 nor X2 in causing Y.
Effectsof causal variables can also be expressed in stand-
ardized formin the nonadditive case. The procedure is analogous to
that developed earlier forthe nonlinear case: Firstone calculates the
metric,or unstandardized, effectofX1 on Y; then one multipliesthis
effectby the ratio of the standard deviation of X1 divided by
the standard deviation of Y. Notice that the standardized effect
of X1, like its unstandardized effect,varies according to the value
of x2.
It is possible to combine various nonadditive and nonlinear
models to fit situations in which nonadditivities and nonlinear-
ities are present. Thus, forexample, the followingfunctionis use-
ful when X1 and X2 are believed to interactand to have nonlinear

effectson Y:
Y = a + b1X,+ b2X2 + b3X1X2+ b4X1(X2)2 + Z ciZi + E (4)
The effectof X1 on Y is aY/aX1 = b1 + b3X2 + b4(X2)2. In this

specification,the extentto which X2 influencesthe effectof X1 on Y
varies nonlinearly over the range of X2.
In sum, then, the equations discussed in thissection provide
a flexible set of specifications for considering nonadditivities, or
"interactions" among some, but not necessarilyall, causal variables
in a model. These specificationsare general enough to be appropri-
ate when both nonlinear and nonadditive effectsare present,and
they can be applied equally well when the nonadditivities them-
selves are nonlinear. In interpretationof these equations, the partial
derivativehas again provided a concise, precise measure ofthe effect
of causal variables on the dependent variable and a parsimonious
indicator of the way in which one causal variable influences the
effectsof another causal variable on the dependent variable. And,
finally,I have noted that the methods I developed for calculating
standardized effectsin nonlinear models can be applied directlyand
easily to these nonadditive models.
The Nonlinear/Nonadditive ModelforCalculatingRatesofReturn.
Some situations in social and economic life may be usefuily con-
ceptualized as investments.For example, "human capital" theory
treatstime spent in school as an investment;one hears parentsspeak
of the onerous aspects of childrearing as investments;the phrase
"emotional investment" seems commonplace; one makes political
investments; and so on. Because investment models are so often
useful in conceptualizing social phenomena, I now give some at-
tention to the measurement of effectsin investmentprocesses.
As always in causal analysis, the firstquestion about invest-
ment models concerns the choice of a mathematical function to
representthe process. To findsuch a function,consider the effectof
time on money invested in a savings account. Where R is the
interestrate, P is the initial deposit, X is the amount of time during
which the money is on deposit, and P' is the amount of money in
the account at the end of the deposit period, the effectof X on the
deposit is given by the usual interestformula:P' = P(1 + R)x. This
formula is the standard model for all investmentprocesses.
A little algebra can be used to write the interestformula in
a more general (and thereforemore useful) form: Let a = ln P, let
b = ln(1 + R), and let Y = P' Then, where e is the base of natural
logarithms,
Y = P' = P(1 + R)x = eaebX- ea+bX (5)
Taking logarithms of both sides, we have ln (Y) = a + bX, a

function that can be estimated by ordinary linear regression.
In most social science applications, several differentinvest-
ment processes are assumed to be operating and the researcher
wishes to separate out the effectsof each. Accordingly,the logarith-
mic form of the model can be generalized to
I
ln(Y) = a +>ibX + (5')
i=1
where the Xi's are the amounts of differenttypesof investmentsand

where Y is a variable (not necessarily dollars) representingthe
quantity in which the returnis "paid."5 The nonlogarithmicform
of the model is Y = ea?b?E.
According to the rules of differentialcalculus, the metric
effectof one of the Xi's (say, Xl) on Y is calculated by taking the
partial derivative,aYlaX1 = blea+?biXi+E. This partial derivative
takes a simpler formifchanges in Y are measured on a proportional
basis and changes in causal variables are measured in the natural
metric.To see this,note that the proportionalchange in Y per unit
change in Xl is (a Y Y)IaX1 = aY 9X1I1 Y. Substitutingb ea+?bix+E
fora YlaX, substitutingea+?bjX+?E for Y, and canceling terms,we get
(e Y/ Y)aX, = bi.
Note that at a given value of Ythe metriceffect,aY/ aX, is
equal to the product of Y and (a Y Y)l aX1; the standardized effect
can be calculated by multiplyingthe metricrate by ax /ay. But note
5Note that Y need not be money. It could be a psychological or attitudi-

nal state, for example.
that in this model the metricand standardized effectsare different

at everyvalue of Y, even though(aY/Y)/aX1
remainsconstant.
The use of the investmentmodel usually focuses attention
on rates of return.We now consider the relationshipbetween rates
of returnand other measures of causal effect.First some definitions
are required. Rates of return(forexample, R in Equation 5 above)
are normally stated as proportional changes in the dependent
variable per elementaltimeperiod(see Debreu, 1959, p. 34). The
to a causal variable Xl is used here to mean the
rate of return
effective
proportionalchange in the dependent variable that is caused by Xl
over the course of one elemental time period. In Equation (5), the
effectiverate of return is R or its algebraic equivalent eb _ 1. In
Equation (5'), the effectiverate of returnto Xl, one of the Xi's, is
ebi - 1. Elemental time periods frequentlyare divided into subin-
tervals,with returnscomputed and compounded in each subinter-
val-for example, savings banks often compute interestquarterly.
Whether calculated foran elemental time period or fora subinter-
val of an elemental period, rates of returnare always expressed as
proportional changes in the dependent variable per elemental
period. However, when returnsare calculated in subintervals,the
effectiverate of returnover the elemental time period will exceed
the rate of returnin any subinterval,due to compounding. And the
smaller the subinterval, the smaller the rate of return over the
elemental interval. As subintervalsgrow smaller, however, the rate
of return in the subintervals approaches a limit. When the in-
vestment process is written as Equation (5'), this limit is
(aY/Y)/laX = aY/laX * 1/Y. Thus when subintervals are only an
instant long, the rate of returnto Xl in the interval is aY/ax, - 1/Y.
I thereforecall this limit the instantaneous rateofreturn to Xi, and I
have already shown (Equation 5') that (aY/Y)/aXa = bl.
To a certain extent,it makes no differencewhetherone uses
the effectiveor the instantaneous rate of returnin interpretationof
investmentmodels. Since the instantaneous rate equals b1and the
effectiverate equals ebi - 1, the effectiverate can be calculated from
the instantaneous rate. And in most cases the effectiveand instan-
taneous rates are approximately equal. In particular, when b1 is
between -0.1 and + 0.1, ebi - 1 is approximately equal to b1.
However, it is worth noting that the instantaneous rate of return
seems particularlywell suited to investmentmodels of social proc-

esses. In business, the elemental time period of an investment is
always explicit and fixedby custom,convenience,or, probably most
often, the frequency with which profitsare counted, taxed, or
distributed.In many social processes,the elemental time period is
not so easy to determine,since accounts are not formallybalanced
and taxes need not be paid. And if a process is hypothesized or
observed to operate continuously,as is probably the case in most
social processes, it may make more sense to think in terms of
instantaneousratesof returnthan to select some arbitraryelemental
time period.
Further, there are certain methodological advantages to
using instantaneous rather than effectiverates of return in causal
analysis. In investmentmodels-that is, in equations like (5')-the
instantaneous rate of returnis clearly and simply related to partial
derivativesand can be obtained directlyfroma multiple regression
analysis. And, as we have just seen, simple manipulations of in-
stantaneous rates of returnallow them to be compared with other
partial derivative-based measures of causal effectgenerated from
other functionalforms.So, to sum up, the instantaneous and effec-
tive rates of returncan be calculated with ease and are verynearly
equal in most applications. However, the instantaneous rates make
more substantive sense in most social science (nonbusiness and
noneconomic) applications, and their use facilitatescomparison of
causal effectsin investmentmodels with causal effectsin other types
of models.
TheCobb-DouglasModel. The followingfunctionoccurs with
some regularityin sociological researchand with great frequencyin
economic analysis:
Y = aX1 X'2 ... XYI,
or, in a simpler notation,
Y = a JXiE (6)
i=1
In economics, Equation (6) is known as the Cobb-Douglas produc-

tion function.In sociology, it seems to have no established name,
though it is often called a multiplicative model. Since there are

numerous other models that are also multiplicative, I referto this
equation as the Cobb-Douglas function.
One of the appeals of the Cobb-Douglas functionis that its
parameters can be estimated by ordinary least-squares regression.
To see this, take logarithmsof both sides of the equation and then
apply the laws of logarithms to obtain the following:
I
ln[Y] = ln[a] + E bi ln[XJ]+ ln[-] (7)
Thus the parameters of the Cobb-Douglas function can be esti-

mated by taking the logarithmsof all variables in the model and
then regressingthe log of Y on the logs of the Xi's.
Sociologistsand economiststend to apply the Cobb-Douglas
functionfordifferentreasons. In economics, a major appeal of the
Cobb-Douglas function is that it produces constant, easily calcu-
lated elasticities. In sociology,the functionis usually applied when
the researcher expects interactionsamong all the variables in the
models. In thinkingabout performancein school, forexample, one
might hypothesize that certain characteristicsof individuals not
only reduce performancebut reduce the effectsofothervariables on
performance.If all causal variables in the model eitherenhanced or
reduced the effectsof all the other causal variables, then there
would be some basis for using the Cobb-Douglas specification.
Mathematically, the interdependence of effects in the Cobb-
Douglas function can be seen by examining the formula for the
metric effectof any causal variable on Y:
I-1
a Y/ax, = [abI J Xi1 Xbi 1E (8)
Note that everycausal variable in the model appears in the formula

forthe metriceffectof everysingle othervariable in the model. And
since the standardized effectis equal to the product of the metric
effectwith uXIl/Y, everycausal variable in the model also appears
in the formula for the standardized effect.
While the formulaforaYl/aX,
clearlycommunicatesthe
existence of interactions among variables in the Cobb-Douglas

function,it has two problems. First, the error term - appears in
Equation (8). Since - is unobservable, its appearance in (8) calls for
some strong assumptions in order to make this formula useful.
Second, Equation (8) is so complicated that it sheds little light on
causal effectsin the Cobb-Douglas specification,regardlessof one's
willingness to make strong assumptions. Both these problems are
readily solved, however. By measuring effectsas instantaneous rates
of return rather than as metric and standardized effects,the
Cobb-Douglas function yields effectmeasures that are simple in
formand exclude ,. To see this,recall that the instantaneous rate of
return to XI is the proportional change in Y per unit change in
XI. Mathematically, then, instantaneous rate of return -
(dY Y)IaX1= aYlaX-I/
1/Y.So,whereRI istherateofreturn
toXI,
= [(abi 17X1I)Xs? |]* 1/Y (9)
But, from the Cobb-Douglas specification, Y - a H?Y=1Xbi,. Sub-

stitutinga 1I=1 Xb.iE for Y,
= [(abi l7 xi) XII ?] 1/a 17Xt ? (10)
Canceling terms,we get RI = b1IXI.

Similarly, when effectsare measured as elasticities the
Cobb-Douglas functionoffersa quite simple formulaforthe effectof
XI on Y. Recall that the elasticity is the proportional change in Y
per proportional change in X. Where EI is the elasticityof Y with
respect to XI, EI = (aY/Y)/(aX1/X1). Applying some algebra,
EI = aYlax1* 1/Y-XI, so E = RI *XI. Substituting bj1XI forRI,
we get E = (bAIXI)XA = b1.In words, when X, changes by 1 per-
cent, Y changes by bI percent. So the Cobb-Douglas functionoffers
intuitivelyappealing, easy-to-calculate measures of the effectsof
causal variables on a dependent variable in situations in which all
causal variables in the model interact with each other.
While point elasticities remain constant in the Cobb-
Douglas specification, metric and standardized effectsvary with
the values of the variables. Nonetheless, at any given values of XI

and Y the metric effect of XI can be computed easily as fol-
lows. By definition,EI = a YlX -XII Y But since EI = b1, bI =
aY/I *XII/Y.Solving for aY/aX1, we get aY/ X1 = Y/XI* b1,
which can be computed easily. Standardized effectsare obtained by
multiplying both sides of the last equation by aXI/aY as follows:
(a Y/aY)/(aXj1aX1) = (Y/aY)1(Xj1aX1) - b .
DECOMPOSITION OF EFFECTS
Causal modeling usually entails decomposing the total effect

of the antecedent variable into direct and indirect components. In
the language of path analysis (Alwin and Hauser, 1975, pp. 38-39):
The totaleffectof one variable on another is the part of

their total association which is neither due to their common
causes, to correlation among their causes, nor to unanalyzed
(predetermined) correlation.... A total effecttells us how
much change in a consequent variable is induced by a given
shiftin an antecedent variable, irrespectiveof the mechanisms
by which the change may occur.... Indirecteffects
are those
parts of a variable's total effectwhich are transmitted or
mediated by variables specified as interveningbetween the
cause and effectof interestin a model. That is, theytell us how
much of a given effectoccurs because the manipulation of the
antecedent variable of interestleads to changes in other varia-
bles which in turn change the consequent variable. The direct
of one variable on another is simply that part of its total
effect
effectwhich is nottransmittedvia interveningvariables.
I now present methods for calculating total, direct, and indirect

effectsin nonlinear/nonadditive multiequation models.
Calculation of Direct Effect

The direct effectof an antecedent variable on a consequent
variable is obtained by calculating the antecedent's effectin a way
that ignores indirect patterns of causation in the model under
consideration. Mathematically, one omits these mediated (indirect)
effectsby (1) ignoring all equations in the model other than the
structuralequation forthe consequent variable and (2) calculating
Figure 3. Diagrammatic and mathematical representationof a causal model corresponding to

Equations (1 1) and (12).
T, X Z
N~~~~~~~~~N
'sS"
N~~~~~~~~~~~N
NN.
Nonlinear or nonadditive patterns of causation
the partial derivativeof the consequent variable with respectto the

relevant antecedent variable in that equation. Consider the model
shown in Figure 3 and in Equations (11) and (12):
S =f(TI,T2,,cl) = ao + a1T1 + a2 ln T2 + c1 (11)
Z = g(Tl,T2,S,c2) = bo + b1T1 + b2T2 + b3S + b4T1T2+ c2
(12)
In this model, the direct effectof T1 on Z is obtained by ignoring
Equation (11) completely and by calculating aZ/aT1 in Equation
(12): aZl/aT1 = b1 + b4T2.
Calculating the Total Effect

The procedure forobtaining the total effectof an antecedent
variable is only slightly more complicated than the method for
calculating its direct effect.A two-step procedure is required to
measure the total effect.
First, it is necessary to uncover the effectsof antecedent
variables "buried" within other variables that intervene between
the antecedent and consequent variables in the model. To make
these buried effectsexplicit, one needs only to substitutethe right-
hand side ofthe structuralequation foreach interveningvariable in
place of the respective interveningvariable in the structuralequa-

tion for the consequent variable. Consider the model shown in
Figure 3 and in Equations (11) and (12). To find the total effectof
T, on Z in this model, we substitutef(T1,T2,c1) forS in Equation
(12) as follows:
Z = g[T1,T2,f(Tl, T2,1c) c1]
= bo + b1T1 + b2T2 + b3(a0 + a1T, + a2 ln T2+ c1) + (13)
b4T1T2+ c2
Multiplying through and collecting terms in Equation (13) gives
Z = bo + b1T1 + b2T2 + b3a0+ b3a1T1+ b3a2ln T2 + b3c1+
b4T1T2+ c2
= bo + b3a0 + (b1 + b3a1)T1 + b2T2 + b3a2ln T2 +
b4T1T2+ b31 + '2
This substitutionprocedure transformsthe structuralequation for

the consequent variable into the reduced-form equation for the con-
sequent variable (see Johnston, 1972, p. 4).
Once the reduced-form equation is calculated, the total
effectof the antecedent variable is calculated by taking the partial
derivativeof the consequent variable with respectto the antecedent
variable in the reduced-formequation, ignoringall other equations.
In the model shown in Figure 3, forexample, the direct effectsof T1
and T2 are obtained by differentiatingEquation (14) as follows:
azlaTj = b1 + b3a1 + b4T2 (15)

AZ/aT2= b2 + (b3a2/T2) + b4T1 (16)
To recapitulate briefly,the total effectof an antecedent
variable on a consequent variable may be obtained firstby calcu-
lating the reduced-formequation for the consequent variable and
then by computing the partial derivativeof the consequent variable
with respect to the antecedent variable in the reduced-formequa-
tion. In principle, this procedure is identical to the widely used
method described by Alwin and Hauser (1975) for use with linear
additive models.6In practice,these procedures differbecause Alwin

and Hauser take advantage of some convenient mathematical
characteristicsof linear additive models to avoid the tedium of
algebraic substitution to obtain the reduced-formequations and
partial derivatives. However, the tedium of algebraic substitution
can be avoided with nonlinear/nonadditive models by applying a
fundamental and elementarytheorem of differentialcalculus the
chain rule forpartial derivatives.(See any elementarycalculus text,
forexample, Schwartz, 1967, p. 641.) According to the chain rule, if
Zis a functionofvariables X1, X2, . . , XI) and ifX1, X2, . ., XI are
in turn functions of variables T1, T2,. . ., TJ, then the partial
derivative of Z with respect to some Tj is given by Equation (17) :7
>3aZ/aX *aXI/aTf
I
azlaTj= (17)
i=l
To apply the chain rule to the example shown in Figure 3 and

Equations (11) and (12), it is necessaryto rewritethe model so that
Z is a functiononly of the Xi's; hence the Xi's are functionsof only
the Tj's as follows in Equations (18) through (21):8
Xi = T, (18)
X2 = T2 (19)
X3= S =f(T7,T2,Ej) =ao + a1T + a2 In T2++ c (20)

Z = g(X1,X2,X3,E2) = bo + b1Xj + b2X2 + b3X3 +
b4X1X2 + c2
Equations (18) and (19) merely clarify notation in subsequent

equations, and Equations (20) and (21) correspond directly to
6Alwin and Hauser do not refer to their effect measures as partial

derivatives, in spite of the fact that they are identical to partial derivatives in
definition, calculation, and interpretation. See Fox (1979) for an alternative
algorithm for calculating effectsin linear additive models.
7 The chain rule is subject to certain conditions of differentiabilitythat
normally are met in regression analysis.
8Equations (18) and (19) merely serve to avoid ambiguous or cumber-
some notation.
Equations (11) and (12). According to the rules of calculus, the

derivatives are calculated as follows:
aX1/aT1= 1
ax2/laT = O
ax3laT, = a,
ax3laT2 = a2IT2
az/ax1= b, + b4X2
az/ax2= b2 + b4X1
aZ/ax3= b3
Substituting these derivatives into Equation (17) gives the total

effectsof T1:
3
aZ/aT1= azlaxi axi/aT1
i=l
= (b1 + b4X2)(1) + (b2 + b4X1)(0) + b3(a1) (22)

= b, + b4X2 + b3a,
And since X2 = T2, Equation (22) can be rewritten:

aZ/aT1
= b1 + b3a, + b4X2 (23)
which is identical to the expression(Equation 15) obtained by the
tedious two-stepprocess of calculating the reduced-formequation
forZ and then computing the partial derivativeofZ with respectto
T1 in the reduced-formequation.
Calculating Indirect Effects

Once the total and direct effectsare calculated, indirect
effectsmay be computed merelyby subtractingthe direct effectof
an antecedent variable fromits total effect.This subtractionproce-
dure is applicable both to linear additive models (see Alwin and
Hauser, 1975) and to nonlinear/nonadditive models. In the model
shown in Figure 3 and in Equations (11) and (12), for example, I
showed that the direct effectof T1 on Z is b1 + b4T2 and that the
total effectof T1 on Z is b1 + b3a1 + b4T2. Subtracting the direct

effectfrom the total effectyields the indirect effectof T1 on Z:
(b1 + b3a1 + b4T2) - (b1 + b4T2) = b3a,

However, it is not actually necessary to calculate direct and total
effectsin order to calculate indirect effects.Some tedious but
straightforwardalgebra will show that the chain rule for partial
derivativesexpressesthe total effectof an antecedent variable as the
sum of its direct and indirect effects.That is, where T's denote
antecedent variables, X's denote interveningvariables, and Z de-
notes the consequent variable, the effecton Z of a given antecedent
variable Tj (which is mediated through interveningvariable Xi) is
givenby theproductaz/axi
axilaT,.
*
In the case where Xj is just a new name for T7 (as X1 is
merelya new name for T1 in the example discussed in the previous
section),the effectof T7mediated "through itself"is the directeffect
of T7 on Z. Thus in Equation (22) the direct effectof T1 is
aZ/ax1 axl/aT1= (b1 + b4X2)(1) = b1+ b4X2
The indirect effectof T7 on Z mediated through X2 is
azl/ax2aX2/aT2= (b2 + b4X1)(O) = 0

And the indirect effectof T1 on Z mediated through X3 is
aZ,/aX3-aX3/aT1= b3a,
Note that these values are equivalent to measures of direct and
indirect effectsobtained firstby calculating the direct and total
effectsand then subtractingdirect fromtotal effectsto obtain the
indirect effects.
STANDARD ERRORS AND SIGNIFICANCE TESTS
Sociological literatureoftengives the impressionthat com-

putation of standard errorsand calculation of significancetests is
difficultand complex in nonlinear and nonadditive equations. (See,
forexample, Althauser, 1971; Southwood, 1978.) In fact,if param-
eters of nonlinear/nonadditivemodels are estimated by regression
or some other method that provides sampling variances and co-

variances of parameter estimates, a theorem from mathematical
statisticsusually makes it triviallysimple (though somewhat tire-
some) to calculate the standard errorsofeffectmeasures discussed in
this chapter.9 And once standard errorshave been obtained, per-
formance of significancetestsis straightforward.The theorem that
provides these convenient results states that if b1, b2, . . . ,bn are
sample estimates of a model's parameters, if K1, K2 ... ., Kn are
constants, if u? is the sampling variance of bi, if cov(bi,b) is the
sampling covariance of bi and bj and if D = L:~ 1 Kibi, then the
sampling variance of D is given by'0
n n
a2 -
E K?(a) + Z> K K.cov(bibi) (24)
i-l i=1 j?i
As an example of how to apply Equation (24), consider the

effectof X, on Y in the following interactive model:
Y = bo + b,X, + b2X2+ b3X1X2+ E (25)
The metric effectof Xi on Y is
aYlax1= b, + b3X2 (26)

Through application of Equation (24), the sampling variance of
aY/lX1 is
rY/2X = aJ2 + X2C2( + 2X2 cov(bl, b3)
9'The sampling variance-covariance matrix of regression coefficients

normally is computed as an intermediate step in multiple regressionprograms,and
a number of widely used regression programs print this matrix (for example, the
BMDP program). Equation (24) is obtained froma trivial extension of Hogg and
Craig (1970, p. 168).
10Equation (24) assumes that the Ki are not sample estimatesof popula-
tion values, but are exact values. When one is evaluating partial derivatives at
estimatedpopulation values (for example, the estimated population mean), stand-
ard errorcalculations are necessarilymore complex. However, such complexity can
normally be avoided by evaluating partials at fixed values of relevant variables.
For example, partials can be evaluated at various points on the sample (not
population) distribution of these variables. Thus in the parabolic model one may
wish to evaluate the partial derivative of Ywith respect to X at the samplemean of
X. I am indebted to Michael Hout for making me aware of this issue.
APPENDIX TABLE
SeveralMeasuresof Causal Effectin SeveralWidely Applicable Mathe
Causal Effect of X
Effect of
Proportional
Metric Effect Standardized Effect Change in Xl
(ay a
( _y/Y ( dY
Specification \aX1f \ax /\
/aXlaXI/X1 J
I. Y a+ > iXi bl, b1(aX5/aY) b1X

i=t
2. ? a + b1 ln(Xt) + >ji biX. b/1X1 (b1/X1) (aX5/aY) bX

i-9
3A. Y = a + b X1 r+ bl(X1)2+ b>X1

E bo + 2b1XI (bo + 2b1X1)(aXl7aY) b5X,+ 2b1X2
i=2
>7
3B. Y=a + bjXII + E jj(jbjXi (jbjXll )(ax1l/a) E b'1nbjXjX
4. Y = a + E~biXA+ b1+5x5x2 b1+ b1+1x2 (b1 + b1+1x2)(ax1/aY b1Xl + b1?1x5x2

i=l
+ bY b Y (axl/aY) bxY
5- -e i~~~~~~~~~~~~
biXi
_t
6. =a rJ xi b1Y/X5 (b1Y/X,)*(aX1/aY) bly

i~=t
NOTE: These functions are defined only for the domain of {Xj } and Y. See text forequivalent formulas forsome of these eff
() indicates estimate.
Indirect effectsexist only in models involving two or more equations. In such models, indirect effectswould be
table to the chain rule for partial derivatives (Equation 17 in the text) or to the substitution procedures for calculation of
indirecteffectsare obtained in metric form,multiplication by the proper quantities can transformthem into standardized e
rates of return, or point elasticities. See text for full discussion.
'
Note that the samplingvariance of aYlaX1,like Y/lX1itself,
varies with the value of X1.
As a second example of how to apply Equation (24), con-
sider the effectof X1 on Y in the followingnonlinear model:
I
Y = a + b1ln(X1) + > biXi + (27)
i=2
The metric effectof X1 on Y in (27) is

aY/aX1= b( bj1/X1) (28)
Through application of Equation (24), the sampling variance of
aY/ax1is (1/X2)a2.
CONCLUSIONS
I have considered a number of topics in this chapter, in-

cluding several correspondences between verbal formulationsand
nonlinear/nonadditive models, strategiesfor measuring causal ef-
fects in these models, methods for decomposing these effectsinto
direct and indirectcomponents,and a technique forcalculating the
sampling variances of these effectmeasures. Although many of the
measures and methods developed here are not well known in
sociology, it is critical to understand that the standard methods of
path analysis belong to the wider family of procedures I have
recommended here. Thus nonlinear/nonadditive models can be
applied to sociological research with no major rethinkingof the
principles of causal modeling that have served the discipline so well
in the last decade.
REFERENCES
ALTHAUSER, R. P.
1971 "Multicollinearity and non-additive regression models." In
H. M. Blalock, Jr., (Ed.), Causal Models in the Social Sciences.
Chicago: AVC.
ALWIN, D., AND HAUSER, R.
1975 "The decomposition of effectsin path analysis." AmericanSocio-
logicalReview40:37-47.
BLAU, P., AND SCHOENHERR, R.

1971 The Structure
of Organizations.
New York: Basic Books.
DEBREU, G.
1959 Theory
of Value:An Axiomatic
AnalysisofEconomicEquilibrium.
New
Haven, Conn.: Yale University Press.
DUNCAN, 0. D.
1966 "Path analysis: Sociological examples." AmericanJournal of
Sociology72:1-16.
FOX, J. D.
1979 "Effectanalysis in structuralequation models: Extensions and
simplified methods for computation." Mimeographed paper.
Toronto: York University.
HOGG, R. J., AND CRAIG, A. T.
1970 Introduction
toMathematicalStatistics.3rd ed. New York: Macmil-
lan.
JOHNSTON, J.
Methods.2nd ed. New York: McGraw-Hill.
1972 Econometric
REES, A., AND SCHULTZ, G.
1970 Workersand Wagesin an UrbanLaborMarket.Chicago: University

of Chicago Press.
SCHWARTZ, A.
2nd ed. New York: Holt, Rinehart
1967 CalculusandAnalyticGeometry.
and Winston.
SOUTHWOOD, K.
1978 "Substantive theory and statistical interaction: Five models."
AmericanJournalof Sociology83:1154-1203.

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Stolzenberg, R. M. 1980. “The Measurement and Decomposition of Causal

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The Measurement and Decomposition of Causal Effects in Nonlinear and Nonadditive Models

Author(s): Ross M. Stolzenberg

While considerable attention has been directed to linear

effects.But the relative rarityof nonlinear and nonadditive models

MEASURING CAUSAL IMPACT

According to conventional definitions,ifone variable causes

1Rate-of-change measures are usually contrastedwith variance-explained

change in independent variable X, net of the effectsof other varia-

Natural Natural Unstandardized

aThat is, normed to zero mean and a unit standard deviation.

used name for the (partial) derivative of Y with respect to X in

2 The rate of returnis sensible

The unstandardized effectof X on Y is 3. To get the standardized

EFFECTS IN COMMON CAUSAL RELATIONSHIPS

I startwith simple, commonly used specificationsand move

ships among variables studied in the social sciences are, in fact,

where Y is the dependent variable, a is a constant,and the b 's are

Parabolas and Higher Order Polynomials

Figure 1. Shapes assumed by Y = a + b1X + b2X2under varyingvalues of a, bl, and b2.

used to test the null hypothesisthat the coefficientforX2 is zero. If

nonlinear and that this relationship is fittedmore accurately by a

aExpressed as change in hourly earnings, in dollars, per additional year of age.

The discussion of effectsin parabolic models has assumed

distributionand at 6, 9, and 12 years of schooling. Or, in another

where Y is the dependent variable, X and the Z, s are independent

Figure 2. Two logarithmic functionsof X.

An advantage of the logarithmic specification is that it is

on Y at any given value of X. And, as in the case of the parabola,

4 The reader should note that I reconstructed the metric coefficientfor

Nonadditive Models and Nonlinear/Nonadditive Models

A nonadditive model specifiesthat the effectof one variable

variables in the model which are neitherhypothesizednor observed

Y = a + b1X1+ b2X2+ b3X1*X2 + > ciZi + E (3)

ful when X1 and X2 are believed to interactand to have nonlinear

Y = a + b1X,+ b2X2 + b3X1X2+ b4X1(X2)2 + Z ciZi + E (4)

The effectof X1 on Y is aY/aX1 = b1 + b3X2 + b4(X2)2. In this

Taking logarithms of both sides, we have ln (Y) = a + bX, a

where the Xi's are the amounts of differenttypesof investmentsand

5Note that Y need not be money. It could be a psychological or attitudi-

that in this model the metricand standardized effectsare different

seems particularlywell suited to investmentmodels of social proc-

or, in a simpler notation,

In economics, Equation (6) is known as the Cobb-Douglas produc-

though it is often called a multiplicative model. Since there are

Thus the parameters of the Cobb-Douglas function can be esti-

Note that everycausal variable in the model appears in the formula

existence of interactions among variables in the Cobb-Douglas

= [(abi 17X1I)Xs? |]* 1/Y (9)

But, from the Cobb-Douglas specification, Y - a H?Y=1Xbi,. Sub-

= [(abi l7 xi) XII ?] 1/a 17Xt ? (10)

Canceling terms,we get RI = b1IXI.

the values of the variables. Nonetheless, at any given values of XI

Causal modeling usually entails decomposing the total effect

The totaleffectof one variable on another is the part of

I now present methods for calculating total, direct, and indirect

Calculation of Direct Effect

Figure 3. Diagrammatic and mathematical representationof a causal model corresponding to

Nonlinear or nonadditive patterns of causation

the partial derivativeof the consequent variable with respectto the