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Comment on structural modeling in marketing: review and assessment.

Article Excerpt
Chintagunta, Erdem, Rossi, and Wedel (CERW) discuss examples of structural research to motivate its value in the empirical marketing literature. They provide a balanced assessment in which they emphasize both advantages and disadvantages. Recognizing the importance of predictive validity in marketing, they describe that structure can reduce flexibility in estimation and potentially reduce fit, yet be more reliable when we are predicting the effects of strategies not observed in the existing data. This is an important contribution of structural research in marketing, and their paper will hopefully spread this message. They also suggest that structure can help us test theories and resolve endogeneity, but also restrict the types of decisions we can prescribe in our normative role as marketing researchers. I comment on these latter three issues below. In [section] 1, I explain how a structural model can begin to differentiate between theories, but also note its limitations. In [section] 2, I argue that using structure to resolve endogeneity provides identification from assumptions that are highly subject to misspecification. In [section] 3, I suggest that structure enables, rather than constrains, our abilities to prescribe improved policies.

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