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Re: st: Iv reg estimates are too large in stnd errors


From   Maarten buis <maartenbuis@yahoo.co.uk>
To   statalist@hsphsun2.harvard.edu
Subject   Re: st: Iv reg estimates are too large in stnd errors
Date   Fri, 20 Nov 2009 13:13:53 +0000 (GMT)

--- On Fri, 20/11/09, Shruti Kapoor wrote:
> I am using ivreg for the first time and am not sure if i
> can do anything to improve my results. The biggest problem 
> i am facing is that the stnd errors on my endogenous variable 
> (morethan2children, even when instrumented) is quite high. 
> Which makes them insignificant. 

In general, large standard errors are not a problem, they are 
a finding. We may or may not like that finding, but that is 
irrelevant. 

Specifically with instrumental variables, I am not surprised
that you find large standard errors. Instrumental variables can
potentially provide you with a very strong argument that the
effect you found is likely to be causal, but there is always a 
price to be paid: in the case of instrumental variable the 
price is low power (i.e. large standard errors). As the 
economists say: there is no such thing as a free lunch.

-- Maarten

--------------------------
Maarten L. Buis
Institut fuer Soziologie
Universitaet Tuebingen
Wilhelmstrasse 36
72074 Tuebingen
Germany

http://www.maartenbuis.nl
--------------------------


      

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