DurbinWuHausman test for choice of model

H0: Random effects is preferred

Chisq (15) = 14.70 pvalue = 0.4733

Did not reject null hypothesis hence random effects is preferred.

Endogeneity test: WuHausnam F test DurbinWuHausman chi sqtest

H0: variable is exogenous. Rejection of H0 means that the variable is endogenous and instruments are needed

12.58 F (1,2283)

Insurance is endogenous. IV estimates appropriate.

pvalue = 0.00040

12.61 Chisq (1)

pvalue 0.00038

KleibergPaap test for underidentification (Anderson canon. correlation LM statistic)

H0: model is underidentified. Rejection of H0 implies that the model is well identified.

LM statistic 225.565

Instruments well identified.

Chisq (4) pvalue = 0.000

Weak instrument test (CraggDonald Wald F statistic)

H0: weakly identified. Rejection of H0 & t statistic >10 (=rule of the thumb) implies that the model is not weak.

F statistic 61.976 5 % maximal IV relative bias = 16.85

Instruments not weak.

SarganHansen J statistic

Test if instruments are uncorrelated with error term. Rejection of H0: instruments are invalid. No problem

Statistic = 2.548

Null hypothesis is not rejected implying that the instruments are valid

Chisq = (3)

Pvalue = 0.4667
