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# RE: st: OLS and IV have opposite sign

 From Sun Yutao To Subject RE: st: OLS and IV have opposite sign Date Mon, 15 Oct 2012 22:40:54 +0200

You mean you get the same value but different signs?

-----Original Message-----
From: owner-statalist@hsphsun2.harvard.edu [mailto:owner-statalist@hsphsun2.harvard.edu] On Behalf Of Shikha Sinha
Sent: Monday, October 15, 2012 10:33 PM
To: statalist@hsphsun2.harvard.edu
Subject: Re: st: OLS and IV have opposite sign

I am estimating the effect of family size (no of children) on probability of work by mother. The endogenous variable is no of children and I instrument this by gender of first born. If the first child is female then family size should be greater.

I understand that IV correct the bias and OLS coeff may be upward or downward biased. One can sign the bias (+) or (-) by examining the correlation between the omited variable and endogenous, but What I do not understand why the sign would change and what determines the opposite sign. I get a negative OLS while a positive IV coeff.

Thanks,
Shikha

On Mon, Oct 15, 2012 at 1:11 PM, Austin Nichols <austinnichols@gmail.com> wrote:
> Shikha Sinha <shikha.sinha414@gmail.com>:
> The econometric reason is simple if you believe the exclusion
> restriction.  Tell us what the endog var is, what the excluded
> instruments are, and someone on the list will provide a (verbal)
> description of the bias producing a negative OLS coef estimate
> (evidently no longer visible in the consistent IV estimate).  Then
> someone else will weigh in on whether the exclusion restriction makes
> sense, probably...
>
> On Mon, Oct 15, 2012 at 3:58 PM, Shikha Sinha <shikha.sinha414@gmail.com> wrote:
>> Dear all,
>>
>> I am estimating an Ordinary least square (OLS) and Instrument
>> variable
>> (IV) model, however the signs are opposite to each other. The OLS
>> coeff is negative, while the IV coeff is positive. Could anyone
>> explain what the signs in these two models are different- is there
>> any econometric reason for this?
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