Cited by 2,355Advanced Causal Inference TechniquesMonetary Policy and Economic ImpactSpatial and Panel Data Analysis

Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments

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Angrist, Joshua D, Krueger, Alan B·2001·Journal of Economic Perspectives

Abstract

Instrumental variables was first used in the 1920s to estimate supply and demand elasticities and later to correct for measurement error in single equation models. Recently, instrumental variables have been widely used to reduce bias from omitted variables in estimates of causal relationships. Intuitively, instrumental variables methods use only a portion of the variability in key variables to estimate the relationships of interest; if the instruments are valid, that portion is unrelated to the omitted variables. We discuss the mechanics of instrumental variables and the qualities that make for a good instrument, devoting particular attention to instruments derived from “natural experiments.”

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  • Observational studies using carefully chosen IVs are sometimes regarded as being equivalent to quasi experiments regarding their power to support causal claims.

    “Observational studies using carefully chosen IVs are sometimes regarded as being equivalent to quasi experiments regarding their power to support causal claims (Angrist and Krueger 2001).”

    From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Angrist and Krueger 2001

  • IV analyses can be applied to any potential source of randomization, including intentionally designed RCTs or quasi-randomization in natural experiments.

    “IV analyses can be applied to any potential source of randomization, including intentionally designed RCTs or quasi-randomization in natural experiments.15,16”

    From Mendelian randomization (2022) · cites this paper as [15]

  • IV analyses are an alternative estimation method that can be used to derive an estimate of the causal effect of the treatment on the outcome by accounting for the size of the association between randomization and the exposure.

    “IV analyses are an alternative estimation method that can be used to derive an estimate of the causal effect of the treatment (here, CRP) on the outcome (SBP) by accounting for the size of the association between randomization and CRP.3,4,12–15”

    From Mendelian randomization (2022) · cites this paper as [15]

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Cited by

Sorted by citations

Authors
Angrist, J. D., & Krueger, A. B.
Affiliations
  • Massachusetts Institute of Technology (US)
  • Princeton University (US)
Venue
Journal of Economic Perspectives
Published
2001-11-01
Volume
15
Issue
4
Pages
69-85
ISSN
0895-3309 (ISSN-L)
OpenAlex
W3123059484
Cited by
2,355
References
98
Citations by year
2026: 58 · 2025: 115 · 2024: 105 · 2023: 124 · 2022: 107 · 2021: 119 · 2020: 144 · 2019: 116 · 2018: 92 · 2017: 103 · 2016: 115 · 2015: 124 · 2014: 121 · 2013: 113 · 2012: 131
FWCI
28.80
Type
journal article
Language
en
Open access
Licence
other-oa
Locations
  • The Journal of Economic Perspectives (publishedVersion, other-oa)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Physical Sciences › Mathematics › Statistics and Probability › Advanced Causal Inference Techniques
  • Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Spatial and Panel Data Analysis
Keywords
instrumental variables, identification, natural experiment, omitted variable bias, causal inference, supply and demand elasticities, measurement error, assessment validity, econometrics

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