BGM-IV: an AI-powered Bayesian generative modeling approach for instrumental variable analysis

• URL: http://arxiv.org/abs/2605.07029v1
• Date: Thu, 07 May 2026 23:18:01 GMT
• Title: BGM-IV: an AI-powered Bayesian generative modeling approach for instrumental variable analysis
• Abstract summary: We propose BGM-IV, a latent Bayesian generative modeling approach that reframes nonlinear IV regression as posterior inference in a causally structured latent space.<n>To account for endogeneity, BGM-IV replaces the confounded outcome likelihood with an IV-integrated pseudo-likelihood that averages over instrument-induced treatment values.
• Score: 3.582443146089385
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Instrumental-variable (IV) regression enables causal estimation under endogeneity, but modern IV problems often involve nonlinear structural effects and high-dimensional covariates. Existing nonlinear IV methods directly learn the causal relation in observed feature space or rely on learned representations within two-stage or moment-based procedures, which can struggle when the causal information is embedded in a high-dimensional representation. We propose BGM-IV, a latent Bayesian generative modeling approach that reframes nonlinear IV regression as posterior inference in a causally structured latent space. BGM-IV infers latent components that separately capture shared confounding structure, outcome-specific variation, treatment-specific variation, and covariate-only nuisance information. To account for endogeneity, BGM-IV replaces the confounded outcome likelihood with an IV-integrated pseudo-likelihood that averages over instrument-induced treatment values within the latent model. Across various benchmark datasets, BGM-IV remains competitive in the classical low-dimensional regime and performs best in high-dimensional covariate regimes. Together, these results show that structured latent generative modeling provides a principled and effective strategy to nonlinear IV estimation with rich covariates. The code of BGM-IV is available at https://github.com/liuq-lab/BGM-IV.

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