EconPapers    
Economics at your fingertips  
 

Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments

Joshua Angrist () and Alan Krueger

No 8456, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The method of instrumental variables was first used in the 1920s to estimate supply and demand elasticities, and later used to correct for measurement error in single-equation models. Recently, instrumental variables have been widely used to reduce bias from omitted variables in estimates of causal relationships such as the effect of schooling on earnings. Intuitively, instrumental variables methods use only a portion of the variability in key variables to estimate the relationships of interest; if the instruments are valid, that portion is unrelated to the omitted variables. We discuss the mechanics of instrumental variables, and the qualities that make for a good instrument, devoting particular attention to instruments that are derived from 'natural experiments.' A key feature of the natural experiments approach is the transparency and refutability of identifying assumptions. We also discuss the use of instrumental variables in randomized experiments.

JEL-codes: G10 J31 (search for similar items in EconPapers)
Date: 2001-09
New Economics Papers: this item is included in nep-mic
Note: LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (565) Track citations by RSS feed

Published as Angrist, Joshua D. and Alan B. Krueger. "Instrumental Variables And The Search For Identification: From Supply And Demand To Natural Experiments," Journal of Economic Perspectives, 2001, v15(4,Fall), 69-85.

Downloads: (external link)
http://www.nber.org/papers/w8456.pdf (application/pdf)

Related works:
Journal Article: Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments (2001) Downloads
Working Paper: Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments (2001) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:8456

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8456

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2020-01-27
Handle: RePEc:nbr:nberwo:8456