Question: A suitable instrumental variable is one that is correlated with the independent variable and affects the dependent variable only through changes in the independent variable.

A suitable instrumental variable is one that is correlated with the independent variable and affects the dependent variable only through changes in the independent variable. Suppose that you are interested in studying the effects of weekly alcohol consumption (alch) on health (health). You consider the following regression model: health = [30 + [31 alch + it Which of the following would make the best instrumental variable for alch? ' Diet ' Exercise habits ' Illegal drug use Sales tax on alcohol in the individual's state

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