What object from the first stage regression (of two-stage least squares) is critical to incorporate in your implementation of the second stage regression?
A) The estimated coefficient for the treatment variable from the first stage.
B) The estimated residuals for the treatment variable from the first stage.
C) The estimated predictions for the endogenous variable from the first stage.
D) The estimated residuals for the endogenous variable from the first stage.

Question

Quizplus · Accepted Answer

The critical object from the first stage of two-stage least squares (2SLS) regression to incorporate in the second stage is the estimated predictions for the endogenous variable. This is because the second stage uses these predictions as a proxy for the actual values of the endogenous variable to address potential endogeneity issues.

What Object from the First Stage Regression (Of Two-Stage Least