Using Propensity Score Matching to Uncover Shopify Capital’s Effect on Business Growth - Shopify

This post details the application of Propensity Score Matching (PSM) to evaluate the impact of Shopify Capital on merchant business growth. It explains the research question, the challenges of conducting a true A/B test, and the methodology used to create comparable treatment (US first-time Capital adopters) and control (Canadian shops not yet eligible for Capital) groups. The post outlines the selection of covariates, the use of caliper matching, and the techniques for assessing matching quality (standardized mean differences, visual diagnostics, and variance ratios) to validate the causal inference.