Write notes on Instrument Variable Method.
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Heya chika,✌️
The method of instrumental variables (IV) is used to estimate causal relationships when controlled experiments are not feasible or when a treatment is not successfully delivered to every unit in a randomized experiment.[1]Intuitively, IVs are used when an explanatory variable of interest is correlated with the error term, in which case ordinary least squaresand ANOVA give biased results. A valid instrument induces changes in the explanatory variable but has no independent effect on the dependent variable, allowing a researcher to uncover the causal effect of the explanatory variable on the dependent variable.
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The method of instrumental variables (IV) is used to estimate causal relationships when controlled experiments are not feasible or when a treatment is not successfully delivered to every unit in a randomized experiment.[1]Intuitively, IVs are used when an explanatory variable of interest is correlated with the error term, in which case ordinary least squaresand ANOVA give biased results. A valid instrument induces changes in the explanatory variable but has no independent effect on the dependent variable, allowing a researcher to uncover the causal effect of the explanatory variable on the dependent variable.
hope it helps!
Mark as brainliest mate ☺️
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