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A question from one of our PhD students:

Hi Marc,

I have a general question about reading references. How do you usually do reference reading? Do you take some notes in any software in your computer? How can you recall the main ideas of a specific paper after you have read a lot relevant papers?

Do you know or have you written any (blog) article about how to read academic references for graduate students?

At first, I had no idea how to answer that question, but then I remembered that a long time ago, Kim Yi Dionne wrote a post addressing just that.

That said, let me state the obvious: You can’t read academic books and articles like you read novels or magazine articles, and developing the right method for reading academic articles is key to becoming a more effective researcher. The way I went about it was pretty simple: I just read, read, and read some more until I developed some good habits, which I can summarize as follows:

Levi Russell writes:

I was wondering if you wouldn’t mind writing a post on 3SLS. I recently sent in a research proposal and part of the feedback I got was that 3SLS was “outdated” and that I needed to find a natural experiment or a good instrument. What do we do when these things aren’t readily available?

Good question. Let me delay the answer a bit to talk about whether three-stage least squares (3SLS) is outdated.

First, a refresher on 3SLS (which I needed myself, as it has been at least 12 years since I haven’t thought about that estimator): 3SLS is 2SLS applied to a system of equations (e.g., a supply equation and a demand equation). Why would you want to apply 2SLS to a system of equations? Two reasons:

1. Each equation in your system has one or more endogenous regressor on the right-hand side (RHS), and
2. You want to take into account the fact that the error terms are correlated across the equations in the system.

In other words, in order to minimize bias (the 2SLS part) and maximize precision (the system part). Thus if you have endogeneity issues across a system of equations (e.g., an equation for quantity supplied, and an equation for quantity demanded, both with endogenous prices on the RHS), it might seem like a good idea to kill two birds with one stone by estimating both equations simultaneously by 3SLS.

An excerpt from a post over at the interestingly named Kids Prefer Cheese:

Just don’t do [IV] …

Here are the problems.

First of all, no matter what you may have read or been taught, identification is always and everywhere an ASSUMPTION. You cannot prove your IV is valid. …

I pretty much refuse to let my grad students go on the market with an IV in the job market paper. No way, no how. Even the 80 year old deadwoods in the back of the seminar room at your job talk know how to argue about the validity of your instruments. It’s one of the easiest ways to lose control of your seminar.

As we say in Minnesota: That’s different. Two things: