Need help understanding propensity score matching (what is my treatment vs my outcome)

Question

suppose I want to incorporate propensity score matching in analyzing sales. Last year, I sold 100 of 300, so my ratio is 33.33%. This year my items costs 5% less and I sold 300/600, so my ratio is 50%.

this year and last year could potentially have different covariates, so it could be anything from customer gender, age, etc etc.

what I want to do is, relative to the price, I want to use propensity score to balance the covariates, and get a sense of the impact of the 5% price decrease. So for example, maybe after balancing my covariates, I find out that my 300/600 is actually just 200/600.

In this case,what is my treatment and what is my outcome when I put this in R/Python? My understanding is that the general definition of PSM is the probability of treament given the covariate. So is my treatment "sold this year"? But I thought "sold" would be my outcome variable

would appreciate some insight.

thanks!

Answer 1

Your treatment is whether or not the price decrease was active, and your outcome is whether or not an item was sold. Note that propensity score matching is not a very good technique for this kind of data. I urge you to consider regression or weighting instead as these don't involve discarding data.