Practice Computing Causal Effects Using Two-Stage Least Squares (2SLS): CreditCo

Now let us repeat the previous CreditCo analysis, but now use 2SLS to compute the causal effect instead of indirect inference.

100 XP

1) Using a linear regression, compute the first-stage effect (i.e. correlation between opting in and the rain storm)
2) Compute the predicted values of opting in
3) Compute the causal effect by linear regression (i.e. correlation between credit balance and predicted opt-in rate)
4) Did opting in to the credit offer increase or decrease credit balances?