Now That Your Synapses

are Firing….
A Look Ahead at Things to
Come
Quantitative Methods II
Lecture 19
What Have We Done?
• In this course we have learned
the basic techniques of
regression analysis
• We have also learned some of
the central problems in using
regression on political science
data
• But there are many other tools
and estimators used in political
science
Maximum Likelihood
Estimation
• MLE is a broader method for
conceptualizing statistical
inference
• We have estimated a model and
asked the question what is the
probability that the true data
differ from this model?
• MLE asks, what is the likelihood
of this model given the data we
observe?
Pervasive Endogeneity
Problems
• Endogeneity is one of most
pervasive problems in social
science research
• Fundamental problem is the
lack of experimental data
• “Causes” can almost always be
“effects”
• Most common response is to
ignore this problem
• We can do better than that!
Examples of Ignored Endogeneity
• Trade is a cause of international
peace
• OR…states trade if they anticipate
peace
• Democracy causes economic
growth
• OR…economic growth causes
democracy
• Campaign money causes
candidates to win elections
• OR…donations go to anticipated
winners
Why Is Endogeneity a
Problem?
• We have equation y=Xβ+u
• We observe covariation
between an x and y
• We attribute this covariation to
β – the impact of x on y

y β x
The Causal
Indeterminacy of
Covariation
• But if y may also be a cause of
x, how are we to assess the
overlap of x and y
• Should covariation be attributed
to β, or a second coefficient “φ”
reflecting the impact of y on x?

y β /φ x
The Sources of
Endogeneity Bias
• The size and direction of
endogeneity bias is a function of the
covariance between u1 and u2
• IF x causes y and y also causes x,
but the error terms are not
correlated across these equations,
we can analyze the equations
separately
• BUT…this scenario is quite unlikely
 When Do We Estimate
Endogeneity?
An Example from Public
Opinion
Demographics
(Age, Race, Gender)
Party
Education Identification

Tolerance For
Casualties

US Right to US Will
Attack Succeed
Solutions to
Endogeneity Bias
• There are two major strategies
for coping with endogeneity
• First, define and measure
observations so as to avoid
endogeneity
• Second, specify the endogenous
system and account for the
covariance of e1 and e2 in the
estimation using instrumental
variables regression.
 Solution 1: Experimental Research

• Endogeneity bias illustrates one of

the great strengths of experimental
research
• Think about whether your causal
mechanism could be addressed
through experiments
• Could be used in combination with
other types of “real world” data
• Prof. McIntosh is the IR/PS expert on
this research strategy.
Solution 2: Instrumental
Variables
Steven Levitt of
• Freakonomics
The basic strategy Fame
is to find an estimator is the
(z) that is both
contemporaneously uncorrelated with the error term from
the originalmaster
model andofthat
this approach
is correlated (i.e.
(preferably highly
so) with the regressor for which it is to serve as an
instrumentusing fire 1992,
(Kennedy department
Bound, Jaeger,spending
and Baker 1995,
Timpone 2001). to instrument for police
• If so, we can IDENTIFY the parameter φ.
spending.) Our own Chris
Woodruff has a famous
y x
instrumental variable to
n
his
name as well (distance   zi  z
of
ˆi  ( yi  yˆ i )
villages from railwayˆ  n line in
i 1

Z Mexico).   zi  zˆi   xi  xˆi 

i 1
Time-Series Analysis

• We have modeled structural

relationships in our data and
made assumptions about the
stochastic term
• Time-series analyses model the
stochastic variation and then
ask whether structural effects
matter given this pattern
Cross-Sectional Time
Series
• Here the approach is structural
like our class
• Similar to autocorrelation
issues
• But much more complex when
we have spatial and temporal
issues at the same time
• Increasingly common tool
Event History Analysis

• Many political phenomena occur

over time
• This approach keeps to
structural modeling approach
but addresses dependent
variables relating to time (asks
the question “how long?”)
• Also known as survival analysis
or hazard analysis
Latent Variables

• Many political science theories

relate to unobserved concepts
• Latent variables models can
explicitly model these complex
variables
• Also good for coping with
measurement error
• LISREL models – common in
survey work
Bayesian Statistics

• Models dynamic processes

based on assumptions about
prior distributions of
probabilities and the updating of
new information
Th-Th-Th That’s All
Folks!
• All these things and many more
are awaiting you in QM3 and
beyond.

• Thanks for a great quarter!