Assume that we are looking at the effect of education on wages, which of the following factors could most likely lead to endogeneity?
A) Height
B) Religion
C) Number of siblings
D) Intelligence

Question

Quizplus · Accepted Answer

Intelligence can be correlated with both education and wages, leading to potential endogeneity. For example, individuals with higher levels of intelligence may be more likely to pursue higher education, which then leads to higher wages. Therefore, controlling for intelligence is necessary to isolate the effect of education on wages. Height, religion, and number of siblings, on the other hand, are unlikely to be related to both education and wages.

Assume That We Are Looking at the Effect of Education