Instrumental Variables Before and LATEr

TL;DR

This paper reviews the development and impact of instrumental variable methods in economics and statistics, highlighting their role in clarifying causal inference and policy analysis.

Contribution

It provides a comprehensive overview of the evolution of instrumental variables and their influence on causal inference in economics and statistics.

Findings

Clarified the role of instrumental variables in causal inference

Highlighted the impact on policy analysis

Connected economics and statistics literatures

Abstract

The modern formulation of the instrumental variable methods initiated the valuable interactions between economics and statistics literatures of causal inference and fueled new innovations of the idea. It helped resolving the long-standing confusion that the statisticians used to have on the method, and encouraged the economists to rethink how to make use of instrumental variables in policy analysis. [arXiv:1410.0163]