In the context of regression analysis, a variable that allows us to isolate the causal effect of a treatment on an outcome due to its exogenous correlation with the treatment is known as a(n):
A) instrumental variable.
B) control variable.
C) difference in difference estimator.
D) dummy variable.

Question

Quizplus · Accepted Answer

An instrumental variable is a variable that is correlated with the treatment variable but is not directly related to the outcome. It allows us to isolate the causal effect of the treatment on the outcome by acting as a control for unobserved confounding variables. Control variables, difference in difference estimators, and dummy variables are not specifically designed to isolate causal effects in this way.

In the Context of Regression Analysis, a Variable That Allows