Two-stage residual inclusion estimation: addressing endogeneity in health econometric modeling.

  title={Two-stage residual inclusion estimation: addressing endogeneity in health econometric modeling.},
  author={Joseph V. Terza and Anirban Basu and Paul J. Rathouz},
  journal={Journal of health economics},
  volume={27 3},
The paper focuses on two estimation methods that have been widely used to address endogeneity in empirical research in health economics and health services research-two-stage predictor substitution (2SPS) and two-stage residual inclusion (2SRI). 2SPS is the rote extension (to nonlinear models) of the popular linear two-stage least squares estimator. The 2SRI estimator is similar except that in the second-stage regression, the endogenous variables are not replaced by first-stage predictors… CONTINUE READING
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