Instrumental variables Sample Clauses

Instrumental variables. ‌ In a linear model all covariates can be classified as either endogenous or exogenous, terminology that arose in the economics literature (Xxxxxxxxxx, 2010). An endogenous covariate is a predictor variable that is correlated with the error term of the outcome. A predictor variable that is unrelated to the error term is known as an exogenous variable. Note that the classification of whether a covariate is endogenous or exogenous is dependent on how the model is specified. If all the covariates are exogenous then the ordinary least squares (OLS) estimator of all covariates on outcome estimates the causal effect of each of these. If a covariate is endogenous then the OLS estimate of its effect is biased.
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Related to Instrumental variables

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