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Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left

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  • Jerry Hausman

Abstract

The effect of mismeasured variables in the most straightforward regression analysis with a single regressor variable leads to a least squares estimate that is downward biased in magnitude toward zero. I begin by reviewing classical issues involving mismeasured variables. I then consider three recent developments for mismeasurement econometric models. The first issue involves difficulties in using instrumental variables. A second involves the consistent estimators that have recently been developed for mismeasured nonlinear regression models. Finally, I return to mismeasured left hand side variables, where I will focus on issues in binary choice models and duration models.

Suggested Citation

  • Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
  • Handle: RePEc:aea:jecper:v:15:y:2001:i:4:p:57-67
    Note: DOI: 10.1257/jep.15.4.57
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.15.4.57
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    References listed on IDEAS

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    3. Amemiya, Yasuo, 1985. "Instrumental variable estimator for the nonlinear errors-in-variables model," Journal of Econometrics, Elsevier, vol. 28(3), pages 273-289, June.
    4. Aigner, Dennis J. & Hsiao, Cheng & Kapteyn, Arie & Wansbeek, Tom, 1984. "Latent variable models in econometrics," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 23, pages 1321-1393, Elsevier.
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    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General

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