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Counterfactual baseline
VocabularyA counterfactual baseline describes the alternative outcome used to assess a change.
Explanation or usage
A comparison asks what would likely have happened without the event or intervention. The baseline should reflect available resources and plausible behavior. It is an analytical assumption to justify, not an observed fact about a world that actually occurred.
Common misunderstandings
Any imagined alternative is an equally credible baseline.
In Economics in One Lesson
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A useful comparison considers a repaired shop alongside the undamaged shop and the purchase the owner might otherwise have made.