Instrumental Variable Estimation: Weak IV

1
Instrumental Variable Estimation Weak IV
Do smoking mothers put their babies at
risk? Birthweight of child and whether and how
much mother smoked during pregnancy Individual
data, U.S., 1988 (National Health Interview
Survey)
Birth weight Smoking (packs per day)
2
OLS
log(bwght) ß0 ß1packs u
log(bwght) ß0 ß1packs ß2faminc u
3
IV (2SLS)
log(bwght) ß0 ß1packs ß2faminc u IV
for packs cigprice Corr(packs,cigprice) 0.01
4
Reduced form and 1st stage
Reduced form log(bwght) ?0 ?1cigprice
?2faminc v
1st stage packs d0 d1cigprice d2faminc w