The second important concept we must learn is counterfactual thinking. Counterfactual thinking is the process of asking, “What WOULD have happened if circumstances were different?” Let’s illustrate counterfactual thinking using the following example:

Dogs are often called “human’s best friend,” but did you know there may be a biological explanation behind this saying? Research has shown that just a few minutes of interacting with dogs or cats can reduce levels of cortisol, a hormone linked to stress that may lead to weight gain or a weakened immune system. Let’s say we’re interested in learning whether interacting with a trained therapy animal leads to decreased levels of cortisol in hospital patients.

Approaching this using counterfactual thinking, we must consider what each patient’s cortisol level would be in two different “universes”:

  • In one universe, a patient interacts with a therapy animal—we will call this “Universe T.”
  • In the other universe, referred to as “Universe C,” the same patient does NOT interact with a therapy animal.

The cortisol levels in these two parallel universes are called potential outcomes because either could potentially be observed. But in reality, we can only observe one cortisol level for a particular patient at one specific moment in time.

Assume that a patient exists in Universe T and ACTUALLY interacted with a therapy animal. The cortisol level observed in this scenario is the observed or factual outcome because it is the outcome that was observed. The cortisol level that would have been observed if the patient existed in Universe C and did not interact with the therapy animal would be the counterfactual outcome. We can never actually observe the counterfactual outcome.

Using counterfactual thinking allows us to compare the exact same person at the exact same time under two different circumstances. Because the only difference between the two universes is that the patient received the treatment in Universe T and the control in Universe C, we could compare the cortisol levels from each universe to get an estimate of the effect of interacting with therapy animals.


The animation to the right illustrates which outcome is the factual outcome and which is the counterfactual outcome when universe T and universe C are true. When the individual is actually in universe T, the cortisol level observed in universe T is the factual outcome and the cortisol level observed in universe C is the counterfactual outcome. If the individual is actually in universe C, the reverse is true.

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