Child Height, Household Resources, and Household Survey Methods

The impact of endogeneity and measurement error on the estimated effect of household economic resources on child height is demonstrated. These econometric problems contribute to uncertainty in the literature about the significance of income effects on child health and nutrition. Results are based on a household survey from Papua New Guinea, where repeated within-year observations on households allows calculation of each variable’s reliability ratio. The relative importance of measurement error and endogeneity bias is shown by comparing estimates that use the reliability ratios to correct only for measurement error with instrumental variables estimates that correct for both endogeneity and measurement error bias. JEL: I12, O12