Econometrics Puzzler #1: To Instrument or Not?

Welcome to the first installment of the Econometrics Puzzler , a new series of shorter posts that will test and strengthen your econometric intuition. Here’s the format: I’ll pose a question that requires only introductory econometrics knowledge, but has an unexpected answer. The idea is for you to ponder the question before reading my solution. Many of these questions are based on common misconceptions that come up year-after-year in my econometrics teaching. I hope you’ll find them both challe