Causal effects that depend on the value of an observable variable,say Wi,
A)cannot be estimated.
B)can be estimate by interacting the treatment variable with Wi.
C)result in the OLS estimator being inefficient.
D)requires use of homoskedasticity-only standard errors.

Question

Quizplus · Accepted Answer

Interacting the treatment variable with the observable variable allows for estimation of the causal effect that depends on the value of the observable variable. This is known as the interaction effect and can be estimated through regression analysis using interaction terms.

Causal Effects That Depend on the Value of an Observable