Tag: Local Instrumental Variables

Local instrumental variables (LIV) vs. two-stage least squares (2SLS)

Jason Shafrin

An interesting recent paper by Moler-Zapata, Grieve, Basu, and O’Neill (2023) compares local instrumental variables (LIV) with two-stage least squares (2SLS) to IV. Local instrumental variable (LIV) approaches use continuous/multi-valued instrumental variables (IV) to generate consistent estimates of average treatment effects (ATEs) and Conditional Average Treatment Effects (CATEs). There is little evidence on how LIV…

Local Instrumental Variables

Jason Shafrin1 Comment

Traditional instrumental variables (IV) econometric methodologies often fail to take into account response heterogeneity. Response heterogeneity based on characteristics not observed by the researcher can create a heterogeneity in the self-selection process. For instance, one group of people who elect to receive surgery may have knowledge of a family history where surgery is typically successful,…