Also notice that we have gotten information on the second rung of the Ladder of Causation (b) from information about the first rung (the correlations, rZY and rZX). We were able to do this because the assumptions embodied in the path diagram are causal in nature, especially the crucial assumption that there is no arrow between U and Z. If the causal diagram were different—for example, if Z were a confounder of X and Y—the formula b = rZY/rZX would not correctly estimate the causal effect of X on Y. In fact, these two models cannot be told apart by any statistical method, regardless of how big
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