A possible solution to errors-in-variables bias is to
A)use log-log specifications.
B)choose different functional forms.
C)use the square root of that variable since the error becomes smaller.
D)mitigate the problem through instrumental variables regression.

Question

Quizplus · Accepted Answer

The best choice to mitigate errors-in-variables bias is through instrumental variables regression, which uses an additional variable correlated with the error-ridden variable as an instrument to help estimate the relationship between the independent and dependent variable. Using log-log specifications or different functional forms may not necessarily solve the problem, and using the square root of the variable may actually exacerbate the bias.

A Possible Solution to Errors-In-Variables Bias Is to