Near Identification of Policy Trade-Offs Using Preference Proxies to Elicit Hidden Information in the Linear Case

This paper shows that neither OLS nor 2SLS can generically identify policy trade offs in the linear case, except under extreme assumptions. Practitioners must be content with near identification and discusses how to choose between these two methods. It a two-stage approach using preference proxies elicit hidden information potentially narrow gap simple specification test used assess whether really contribute improving identification.