Genetic Markers as Instrumental Variables

The use of genetic markers as instrumental variables (IV) is receiving increasing attention from epidemiologists, economists, statisticians and social scientists. This paper examines the conditions that need to be met for genetic variants to be used as instruments. Although these have been discussed in the epidemiological, medical and statistical literature, they have not been well-defined in the economics and social science literature. The increasing availability of biomedical data however, makes understanding of these conditions crucial to the successful use of genotypes as instruments for modifiable risk factors. We combine the econometric IV literature with that from genetic epidemiology using a potential outcomes framework and review the IV conditions in the context of a social science application, examining the effect of child fat mass on academic performance.