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Does sport affect health and wellbeing or is it the other way around? A note on reversecausality in empirical applications

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  • Jing Guan
  • J.D. Tena

Abstract

Simultaneity of endogenous variables is an issue in econometrics analysis as it affects the identification of structural parameters. Dealing with it implies the use of untestable assumptions such as, for example, choosing relevant instrumental variables, relying on the strong ignorability condition or imposing restrictions in the direction of causality among the endogenous variables. In order to overcome this problem, many recent empirical papers in the sport literature have proposed the use of seemingly aseptic approaches based on the estimation of simultaneous equations for the endogenous variables with correlated error terms. In this note, we discuss the required conditions to consider this approach as a valid alternative to instrumental variables in order to deal with the simultaneity problem.

Suggested Citation

  • Jing Guan & J.D. Tena, 2020. "Does sport affect health and wellbeing or is it the other way around? A note on reversecausality in empirical applications," Working Papers 202017, University of Liverpool, Department of Economics.
    • Handle: RePEc:liv:livedp:202017
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