Decomposition of Total Effect with the Notion of Natural Counterfactual Interaction Effect

Abstract: Mediation analysis serves as a crucial tool to obtain causal inference based on directed acyclic graphs, which has been widely employed in the areas of biomedical science, social science, epidemiology and psychology. Decomposition of total effect provides a deep insight to fully understand the casual contribution from each path and interaction term. Since the four-way decomposition method was proposed to identify the mediated interaction effect in counterfactual framework, the idea had been extended to a more sophisticated scenario with non-sequential multiple mediators. However, the method exhibits limitations as the causal structure contains direct causal edges between mediators, such as inappropriate modeling of dependence and non-identifiability. We develop the notion of natural counterfactual interaction effect and find that the decomposition of total effect can be consistently realized with our proposed notion. Furthermore, natural counterfactual interaction effect overcomes the drawbacks and possesses a clear and significant interpretation, which may largely improve the capacity of researchers to analyze highly complex causal structures.