Imagine you would like to estimate the following model health Bo + B₁cigarettes_day + u where health is self-rated health on a 1 to 5 scale (5 = very healthy) and cigarettes_day is the number of cigarettes the person smokes per day (on average). Imagine you would like to estimate B₁ using an instrumental variable (IV) regression. As instrument, you would use the variable female, which is equal to 1 if the person is female and 0 otherwise. For the situation described above, a) state the IV relevance assumption b) state the IV exogeneity assumption In your answer, use the actual variable names (instead of e.g. x, y and z).
Imagine you would like to estimate the following model health Bo + B₁cigarettes_day + u where health is self-rated health on a 1 to 5 scale (5 = very healthy) and cigarettes_day is the number of cigarettes the person smokes per day (on average). Imagine you would like to estimate B₁ using an instrumental variable (IV) regression. As instrument, you would use the variable female, which is equal to 1 if the person is female and 0 otherwise. For the situation described above, a) state the IV relevance assumption b) state the IV exogeneity assumption In your answer, use the actual variable names (instead of e.g. x, y and z).
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section: Chapter Questions
Problem 4SGR
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