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  • Testing instrument validity - ordered probit

    Hi,

    I am looking at the relationship between financial inclusion and poverty. my dependent variable is income quintile (inc_q) which is an ordinal variable and i have some control variables along with the binary financial inclusion variable. I used extended ordered Probit regression to address the problem of endogeneity in the financial inclusion (fin_inc) variable. I ran the following code

    eoprobit inc_q female age educ emp_in time , endogenous(fin_inc = fin14, probit)

    where fin14 is my instrument and it gives data on if an individual has made mobile phone transaction or not. I want to test if this a good instrument. how do I test for for instrument exogeneity?


    Any advice on this is appreciated


    D. H
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