Tremendously depressing. We have a huge problem here. Absolutely brilliant by Alwyn Young on the replication crisis in economics. In empirical practice, instrumental variables appears to be a very weak crutch indeed. this reinforce my judgment that it is almost always better to write down the causal structure, present the correlations, and then provide a map given the correlations and given reasonable assumptions about the possible organization for the causal network from causes to effects: Alwyn Young: Consistency without Inference: Instrumental Variables in Practical Application: "I use Monte Carlo simulations, the jackknife and multiple forms of the bootstrap... 1359 instrumental variables regressions in 31 papers.... Non-iid error processes adversely affect the size and power of IV estimates, while increasing the bias of IV relative to OLS, producing a very low ratio of power to size and mean squared error that is almost always larger than biased OLS. Weak instrument pre-tests based upon F-statistics are found to be largely uninformative.... Statistically significant IV results generally depend upon only one or two observations or clusters, excluded instruments often appear to be irrelevant, there is little statistical evidence that OLS is biased, and IV confidence intervals almost always include OLS point estimates...
#noted
