An instrumental variable is relevant if that variable is:
A) a dichotomous variable.
B) normally distributed.
C) a consistent estimator of the coefficient on the treatment.
D) correlated with the treatment after controlling for other control variables in the determining function.

Question

Quizplus · Accepted Answer

An instrumental variable is relevant if it is correlated with the treatment after controlling for other control variables in the determining function. Option A and B are not correct because a dichotomous variable and normal distribution are not the only qualifications for an instrumental variable. Option C is also not correct because a consistent estimator of the coefficient on the treatment is necessary, but not sufficient for an instrumental variable to be relevant.

An Instrumental Variable Is Relevant If That Variable Is