Let's take the bias out of econometrics

Qin, Duo

Abstract

This study exposes the cognitive flaws of ‘endogeneity bias’. It examines how conceptualisation of the bias has evolved to embrace all major econometric problems, despite extensive lack of hard evidence. It reveals the crux of the bias – a priori rejection of causal variables as conditionally valid ones, and of the bias correction by consistent estimators – modification of those variables by non-uniquely and non-causally generated regressors. It traces the flaws to misconceptions about error terms and estimation consistency. It highlights the need to shake off the bias to let statistical learning play an active and formal role in econometrics.

JEL classification: B23, B40, C10, C50

Citation

Qin, D. (2018). Let's take the bias out of econometrics. Journal of Economic Methodology, 26(2), 81-98. https://doi.org/10.1080/1350178X.2018.1547415

• Journal Article Type: Article
• Acceptance Date: Jul 16, 2018
• Online Publication Date: Nov 19, 2018
• Publication Date: Nov 19, 2018
• Deposit Date: Aug 20, 2018
• Publicly Available Date: Aug 20, 2018
• Journal: Journal of Economic Methodology
• Print ISSN: 1350-178X
• Electronic ISSN: 1469-9427
• Publisher: Taylor and Francis Group
• Peer Reviewed: Peer Reviewed
• Volume: 26
• Issue: 2
• Pages: 81-98
• DOI: https://doi.org/10.1080/1350178X.2018.1547415
• Keywords: simultaneity, omitted-variable bias, self-selection, consistency, causality