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Re: st: RE: IV reg est with high standard errors

From   Maarten buis <[email protected]>
To   [email protected]
Subject   Re: st: RE: IV reg est with high standard errors
Date   Sat, 21 Nov 2009 04:30:32 -0800 (PST)

--- On Fri, 20/11/09, Shruti Kapoor <[email protected]> wrote:
> So if I understand correctly, having high standard errors is a
> common problem when one uses Ivs, however since the z-values
> are low and p-values high would it still be safe to assume
> there is causality however with low prediction power? 

No, not significant means not significant, regardless of the power
of the test you use. So your conclusion is that the data does not
contain enough information to reject the null-hypothesis.  

Power is the likelihood of finding a significant effect when the 
effect exists in the population, so low power means that you are 
not so likely to find what you are looking for. That is what I 
meant when I said that there is a price to pay for using 
instrumental variables.

Hope this isn't too depressing,

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


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