Causal Inference in Machine Learning: Understanding Cause-and-Effect

Last updated by Rishabh Dev Choudhary on Sep 02, 2024 at 12:05 PM | Reading time: 12 minutes

Machine learning (ML) is everywhere, and it’s wonderful! It helps us in transforming industries, making our day to day life easier, and solving problems we never thought we could. In fact, According to Statista, 82% of organizations require machine learning skills. But you know what? ML still has a long way to go. One big challenge is how and why something happens rather than just the fact that it will happen.

This is where Causal Inference comes into play. Today, we will dive deeper into Causal Inference in Machine Learning and see why this simple concept helps us distinguish correlation vs causation.

What Is Causal Inference in Machine Learning?

Causal Inference in machine learning is about getting at the structure of what causes what. For example, do people become healthier because they eat more vegetables, or do people who are health-conscious tend to eat more veggies? Causal inference seeks to resolve those doubts by doing more than just tabulating the statistics.

Causal inference in machine learning is about finding what causes what, or what explains why. You may encounter millions of correlations in your dataset, but, if you do not understand the cause behind them or why they are formed, there is a dangerous road ahead for you to tread.

It refers to the process of modeling relationships between variables when we are interested in understanding how changes to an independent variable will lead to changes in a dependent variable. Traditional machine learning models that most people use essentially find associations between different variables and the dependent variable, but cannot be used to make causal inferences.

Also read: What is Machine Learning? A Comprehensive Guide

Why Is Causal Inference Important in Machine Learning?

You might be asking yourself, why is causal inference important in machine learning? Don’t we just have to get a model that can predict outcomes with high accuracy? While prediction is important, causality helps us to be more knowledgeable to get the desired outcomes.

Let’s break it down:

Improved Decision-Making: Causal inference explains the impact of different things at a small level. For instance, when it comes to marketing, if you know that an increase in the advertising budget causes an increase in sales (rather than just being correlated with it), then you can help companies use their resources better.
Avoiding Pitfalls of Spurious Correlations: Machine learning models are often very successful in finding relationships that are by no way causal. To give an example, a model might find that sales of ice cream co-vary with higher crime rates. But does eating ice cream cause crime? Of course, it does not! The real cause is the increase in temperature during the summer months. Causal inference helps prevent us from making such deceptive conclusions.
Better Generalization: Models incorporating causal inference *tend* to generalize better in new situations. This is because these models are built on knowing how things work, not just learning/fitting the data.
Ethical Considerations: In domains like healthcare and social sciences, potentially making decisions on correlation alone and not causation could lead to serious ethical concerns. Causal machine learning makes sure we operate in an intervention regime driven by logic and do not risk causing harm to anyone inadvertently.

Difference Between Correlation and Causal Inference in Machine Learning

This is one of the main misleading statements about artificial intelligence and machine learning. Just because there is a correlation between two variables does not mean that one variable caused the other. This is where causal inference and machine learning step into this gap.

Correlation

Correlation is a statistical measure that gives you an idea of the strength and direction of the relationship among variables. For instance, there might be a correlation between the number of hours studied and exam scores. But does that mean studying more hours causes higher scores? Not necessarily. It could be that students who study more also tend to be more disciplined, so it's actually their discipline that leads to better scores.

Causation

Causation, however, refers to the form when one event is the effect resulting from another occurring event, i.e., it's actually cause and effect relationship. If more study leads to higher scores in exams, the scores will directly change with the change in study hours.

Knowing that correlation does not imply causation is one thing. Misunderstanding this warning sign can lead to faulty decisions.

Also read: Artificial Intelligence vs Machine Learning: 9 Key Differences

Uses and Benefits of Causal Inference in Machine Learning

Causal inference in machine learning is not a niche area of research. It has applications and delivers benefits anywhere. Here are some:

1. Healthcare

Healthcare is one of those critical areas where causal inference can truly change lives. Many classical machine learning models in healthcare focus on prediction—predicting if a patient will develop a certain condition, for example. But sometimes, it is not enough to know what will happen; we also need to understand why it happens.

Treatment Effectiveness: Causal inference in machine learning gives healthcare professionals the ability to do more than make predictions; it helps them understand whether or not a treatment works. For example, a machine learning model might predict that patients of certain characteristics respond well to a new drug. But is it the drug that really does good, or does it have to do with other things such as the patients’ sickness history or their lifestyle changes?
Personalized Medicine: Healthcare providers will be able to deliver interventions through their understanding of the causal relationships between treatments and outcomes on patients. This can lead to a better treatment that has fewer side effects. This translates into better patient outcomes and less healthcare expenditure in the long run.
Policy Development: Public health policies require making causal inferences on how to best improve population health. Knowing the causal effect of a vaccination program, a public health campaign or a new healthcare policy can help designing real interventions.

2. Marketing and Advertising

In the competitive marketing landscape, understanding what motivates consumer behavior is critical to winning. But marketers have typically had to settle for surface-level correlations. Causal inference in machine learning empowers marketers to do better — unlocking what really drives customer action.

Campaign Effectiveness: Many times marketers run multiple campaigns through different channels but are unsure which campaign is actually driving sales or creating a brand name. Causal inference helps the marketers to find out which specific action(s) are causing the outcomes being seen. For example, increased spending on one platform or on a particular demographic.
Customer Segmentation: Understanding causality also helps in better customer segmentation. By identifying the causal variables which are responsible for making certain segments buy, marketers can make better marketing strategies to target those segments that will have higher conversion and better return on marketing (ROM).
Budget Allocation: Causal inference helps businesses decide where to spend their marketing budget in a smarter way. Instead of trying to do everything with too little money and spreading it thin across all channels, they can invest where there is evidence that this is what it takes to achieve the expected results, be it increased sales, higher engagement or improved customer retention.

Also read: How to Become a Machine Learning Engineer in 2024?

3. Public Policy

In the public policy arena, when decisions are made on the basis of faulty assumptions, they can perpetuate harmful patterns or exacerbate problems. Causal inference in machine learning is a tool that equips policy entrepreneurs with evidence to help them develop policies that get at the actual causes of social problems.

Evaluating Policy Impact: Whenever a new policy is put in place – be it a tax reform, an education initiative, or a public health intervention – it’s important to know how much of a difference that policy has actually made. Causal inference helps policymakers figure out if the policy itself caused the changes they’re observing or if something else was going on. That way, resources aren’t wasted on policies that aren’t working and can be tweaked or abandoned altogether.
Social Programs: Governments and Non-Governmental Organizations (NGOs) increasingly design and implement social programs aimed at improving outcomes in areas such as education, poverty reduction, and public health. Causal inference can help to evaluate the effectiveness of these programs by identifying the specific elements or interventions within the program that actually work and accordingly refine and scale up the more effective programs.
Crisis Management: In natural calamities or pandemics, being fast and accurate in your decision-making is very important. This grants the regulators an opportunity to quickly assess how effective various interventions were and make adjustments to their strategies to prevent harm and support recovery.

4. Economics and Finance

In economics and finance, causality is crucial for predicting market changes, managing risks, and making investment decisions. In the context of machine learning, causal inference equips us with the right tools to disentangle complex economic relationships and improve predictions.

Market Analysis: Financial analysts always want to know what is driving the markets. However, traditional ML will only tell you that a bunch of other macro-economic factors are weakly correlated with the stock market, not what is causing the changes in the market. Causal inference in machine learning will give you much sharper prediction and better investment strategies.
Risk Management: Finance is all about risk and return. Risk management in finance means trying to figure out what can cause financial losses and taking actions aimed at preventing them. Causal inference will help institutions figure out what the real causes of risk are - is it interest changes? Geopolitical events? Changes in customer behavior? - and take actions to manage/avoid those risks.
Investment Decisions: It is not enough for investors to know only what types of assets are likely to appreciate but also the reasons behind the appreciation. Causal inference in machine learning empowers investors to recognize the principal elements or drivers impacting future performance and thus guide them in making wiser investment decisions. For instance, knowing how policy interventions cause development in particular industries may assist investors in preparing themselves for a sector’s growth.

Also Read: Essential Machine Learning Skills For a Successful AI Career

5. Education

Causal inference in machine learning is increasingly being seen as relevant outside the world of ML research, too. In particular, there is growing interest in using data-driven approaches to improve student outcomes and to guide decisions about curriculum and resourcing from educators and policymakers.

Curriculum Development: To design better programs, educators need to know which changes to teaching and curriculum actually improve students’ performance. If causal inference can demonstrate that students remember material better when taught through hands-on activities, schools may be inspired to incorporate more such activities into their curriculum.
Resource Allocation: Schools frequently confront the problem of how to distribute scarce resources (funding, staff, materials) in a manner that will produce the highest level of student achievement. Causal inference can help us pinpoint which particular investments (e.g., reducing class size, providing extra tutoring, or advanced technology) are most effective so that resources can be targeted effectively.

Parting Thoughts

Causal inference in machine learning is a fundamental tool for understanding and reasoning about the world; separating correlation and causation gives us the ability to understand and predict the consequences of our actions, make better decisions, optimize functionally over interventions, as well as have more unbiased models. In every domain where we are interested in inferring which variables cause another variable to react, there we can benefit from causal inference.

Traditional machine learning models can predict, but by incorporating causal inference in our models, we can not only predict but also understand why it happens. Not only does it make us take better decisions and stop us from falling into the trap of spurious correlations, but it also makes sure that we do things for the right reason.

Master Machine Learning with Interview Kickstart Today!

Ace your machine learning career with Interview Kickstart’s Advanced Machine Learning Course today! We provide the ultimate launchpad for your success. Learn directly from 500+ FAANG instructors and master the curriculum used by top tech companies. Gain invaluable hands-on experience through live training sessions and mock interviews, conducted by industry veterans. Join a thriving community of over 17,000 tech professionals who have successfully transitioned into rewarding machine learning careers. Ready to take the next step? Register for our free webinar today and discover how Interview Kickstart can empower you to achieve your goals.

FAQs: Causal Inference in Machine Learning

Q1. What is the difference between causal inference in machine learning and traditional machine learning methods?

Traditional machine learning predicts something using correlations, and causal inference in machine learning focuses on understanding cause-and-effect to make decisions better.

Q2. How does causal inference in machine learning improve the accuracy of machine learning models?

Causal inference in machine learning makes sure that the predictions are based on true causal relationships so that machine learning gives more trustworthy and actionable insights.

Q3. Can causal inference in machine learning be applied to all types of machine learning problems?

Causal inference in machine learning is particularly powerful in situations where you need to understand cause-and-effect, but you don’t have to compute it to make predictions.

Q4. What are the challenges of integrating causal inference with machine learning?

Challenges include data complexity, sophisticated modeling, and valid assumptions, but the potential benefits are substantial to decision-making.

Q5. Why should businesses consider using causal inference in their machine learning models?

Causal inference helps businesses identify true causes behind trends, leading to better strategies and optimized resource allocation.

Related reads:

AUTHOR

Rishabh Dev Choudhary

Machine Learning Algorithm

Machine Learning

How to Nail your next Technical Interview

Step 1

Step 2

Congratulations!

You have registered for our webinar

Oops! Something went wrong while submitting the form.

Step 1

Step 2

Confirmed

You are scheduled with Interview Kickstart.

Redirecting...

Oops! Something went wrong while submitting the form.

Worried About Failing Tech Interviews?

Attend our webinar on
"How to nail your next tech interview" and learn

Hosted By

Ryan Valles

Founder, Interview Kickstart

Our tried & tested strategy for cracking interviews

How FAANG hiring process works

The 4 areas you must prepare for

How you can accelerate your learnings

How to Nail your next Technical Interview

Nick Camilleri

Causal Inference in Machine Learning: Understanding Cause-and-Effect

Contents

Rishabh Dev Choudhary

Attend our Free Webinar on How to Nail Your Next Technical Interview

How to Nail your next Technical Interview

Worried About Failing Tech Interviews?

Tools to Enhance Full Stack Development with AI

The Future of Data Science: Emerging Trends and Opportunities

Data-Driven Decision Making: Your Roadmap to Business Success

The Business Impact of Machine Learning: Real-world Case Studies

What is OpenAI? Everything You Need to Know

Mock Interviews for Generative AI: Essential Practice to Land Top AI Roles

Top Python Scripting Interview Questions and Answers You Should Practice

Complex SQL Interview Questions for Interview Preparation

Zoox Software Engineer Interview Questions to Crack Your Tech Interview

Rubrik Interview Questions for Software Engineers

Top Advanced SQL Interview Questions and Answers

Twilio Interview Questions

Ready to
Enroll?

Next webinar starts in

How to Nail your next Technical Interview

You may be missing out on a 66.5% salary hike*

Nick Camilleri

How many years of coding experience do you have?

FREE course on 'Sorting Algorithms' by Omkar Deshpande (Stanford PhD, Head of Curriculum, IK)

How can we help?

Register for Webinar

Read our Reviews

Send us a note

Causal Inference in Machine Learning: Understanding Cause-and-Effect

Contents

Rishabh Dev Choudhary

Attend our Free Webinar on How to Nail Your Next Technical Interview

How to Nail your next Technical Interview

Worried About Failing Tech Interviews?

Tools to Enhance Full Stack Development with AI

The Future of Data Science: Emerging Trends and Opportunities

Data-Driven Decision Making: Your Roadmap to Business Success

The Business Impact of Machine Learning: Real-world Case Studies

What is OpenAI? Everything You Need to Know

Mock Interviews for Generative AI: Essential Practice to Land Top AI Roles

Top Python Scripting Interview Questions and Answers You Should Practice

Complex SQL Interview Questions for Interview Preparation

Zoox Software Engineer Interview Questions to Crack Your Tech Interview

Rubrik Interview Questions for Software Engineers

Top Advanced SQL Interview Questions and Answers

Twilio Interview Questions

Ready to Enroll?

Next webinar starts in

Ready to
Enroll?