Health Services Research (HSR) Methods
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Hausman Test for Endogeniety
Related Terms: Two Stage Least Squares Regression (2SLS); Instrumental Variables (IV); Ordinary Least Squares (OLS)

A statistical test to check for correlation between a suspected endogenous explanatory variable and the error term. The test works by comparing the estimates obtained from ordinary least squares (OLS) and two-stage least squares (2SLS) regression equations. The test requires at least one variable that is causally related to the suspected endogenous explanatory variable, but otherwise unrelated to the dependent variable.


Further Reading
Wooldridge, J.M. 2003. Introductory Econometrics, Mason, OH: Thomas South-Western.

Kennedy, P. 1998. A Guide to Econometrics, Cambridge, MA: The MIT Press.