Module 2, Part 2: Instrumental Variables
In part 2, we formally introduce instrumental variables and discuss some of the thorny issues associated with IV in practice (namely, testing for instrument validity and interpreting the results).
Objectives
- Understand and describe the problem of weak instruments and how to test for weak instruments empirically
- Define and explain a local average treatment effect
Activities
- Continue work with the CDC Tax Burden on Tobacco data
- Data simulation and practical issues with IV
Slides
Use the buttons below to open the slides either as an interactive website or as a static PDF (for printing or storing for later). You can also click in the embedded slides and navigate through them with your left and right arrow keys.
Fun fact: If you type ? (or shift + /) while going through the slides, you can see a list of special slide-specific commands.