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The researcher decides to estimate the effect of food stamps using an instrumental variable approach. She uses assignment to the treatment group as instrument
The researcher decides to estimate the effect of food stamps using an instrumental variable approach. She uses assignment to the treatment group as instrument for the actual receipt of food stamps. She obtains the following first stage estimationresults. . regress F T, robust noheader. Robust F Coef. Std. Err. t P>|t| [95% Conf. Interval] T cons .624 .376 .0306963 .0306963 20.33 0.000 12.25 0.000 .5636897 .3156897 .6843103 .4363103 c) Do you think that the instrument relevance condition holds? Is T a weak instru- ment? d) Do you think that the instrument exogeneity condition holds? e) The following table shows the averages of Hi and Fi for those assigned to treatment group (T; 1) and for those assigned to the control group (T; = 1). Use the results in the table below to obtain the instrumental variable estimate of the effect of food stamps on the probability that a child has poorhealth. T = 1 T = 0 E [H/T =x] E[Fi|T;=x] 0.476 0.544 1 0.376
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