Fundamental Limits and Optimal Methods for Sharp Analytical Causal Bounds in Instrumental Variable Models

TL;DR

This paper demonstrates that sharp analytical bounds in instrumental variable models inherently require exponential complexity, challenging previous claims of low-complexity heuristic methods, and provides optimal algorithms with accompanying code.

Contribution

It proves that sharp bounds must grow exponentially in complexity, establishing fundamental limits and offering optimal methods with code implementations.

Findings

Sharp bounds require exponential number of linear terms.

Number of instrumental variable inequalities also grows exponentially.

Provided code matches the proven lower bounds for efficiency.

Abstract

Bounding causal effects analytically, rather than numerically, is appealing for its interpretability and conceptual clarity. Existing sharp methods rely on optimization-based approaches such as the Balke-Pearl framework, whose computational complexity grows rapidly. An alternative line of work derives bounds heuristically using probability laws and generic inequalities, and some recent papers have claimed or conjectured that this approach can yield sharp analytical bounds with substantially lower complexity. In this paper, we show that this perceived advantage is illusory. In particular, in a discrete instrumental variable setting, we show that any sharp analytical bound for the average treatment effect must be expressible as a maximum (minimum) over a collection of linear terms whose cardinality grows exponentially in the number of values taken by the outcome. In parallel, we show that the number of instrumental variable inequalities itself also grows exponentially. Consequently, bounds and inequalities expressed using only polynomially many such terms cannot be sharp. As a constructive complement, the paper is accompanied by codes implemented in python and R to derive sharp analytical bounds and sharp inequalities with optimal efficiency, matching the lower bounds proven in this paper. These codes are available online.