176 IV5 Relevance condition

This video explains the first crucial condition for a good instrumental variable: relevance. We delve into what makes an instrument relevant, using the example of distance from university affecting education levels. You'll learn how to test this condition directly with data using a first-stage regression and why simply being statistically significant isn't enough. Understanding the relevance condition is vital for obtaining reliable causal estimates. Visit AxiomTutoring.com and subscribe to @AxiomTutoringCourses.