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Using instrumental variables to establish causality

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Becker, Sascha O. (2016) Using instrumental variables to establish causality. IZA World of Labor (250). doi:doi:10.15185/izawol.250

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Official URL: http://dx.doi.org/10.15185/izawol.250

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Abstract

Randomized control trials are often considered the gold standard to establish causality. However, in many policy-relevant situations, these trials are not possible. Instrumental variables affect the outcome only via a specific treatment; as such, they allow for the estimation of a causal effect. However, finding valid instruments is difficult. Moreover, instrumental variables estimates recover a causal effect only for a specific part of the population. While those limitations are important, the objective of establishing causality remains; and instrumental variables are an important econometric tool to achieve this objective.

Item Type: Journal Article
Divisions: Faculty of Social Sciences > Economics
Journal or Publication Title: IZA World of Labor
Publisher: IZA
ISSN: 2054-9571
Official Date: April 2016
Dates:
DateEvent
April 2016Published
Number: 250
DOI: doi:10.15185/izawol.250
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Open Access

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