Instrumental Variables in Health Research
Instrumental variables (IV) is an econometric method to estimate causal effects when treatment or exposure is not randomly assigned and confounding is severe or unmeasured. IV relies on a third variable (instrument) that influences treatment but does not directly affect the outcome, allowing researchers to isolate the causal effect from the noise of confounding. Developed extensively in econometrics (Angrist & Pischke, 1990s–2000s), IV methods are increasingly used in health economics and health services research to leverage natural experiments and policy changes.
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- Angrist, J. D., & Pischke, J. S. (2009). Mostly Harmless Econometrics: An Empiricist's Companion. Princeton: Princeton University Press. · URL
- Bound, J., Jaeger, D. A., & Baker, R. M. (1995). Problems with Instrumental Variables Estimation When the Correlation Between the Instruments and the Endogenous Explanatory Variable is Weak. Journal of the American Statistical Association, 90(430), 443-450. · DOI 10.1080/01621459.1995.10476536
- Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data (2nd ed.). Cambridge, MA: MIT Press. · URL
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