If the instrumental variable estimator has an upward bias, the ordinary least square estimator always has a downward bias.

Question

Quizplus · Accepted Answer

The bias direction of the ordinary least squares (OLS) estimator does not necessarily oppose that of the instrumental variable (IV) estimator. The bias in each estimator depends on the specific nature of the endogeneity or external factors affecting the variables, not on a fixed relationship between the biases of the two estimators.

If the Instrumental Variable Estimator Has an Upward Bias, the Ordinary