This chapter examines issues relating to empirical methodology and hypothesis testing. Because data on parents, children, and siblings are observational, hypotheses testing has proved difficult. This problem stems from the absence of data on genotypes, suggesting the non-observability of ability, personality type, and susceptibility. The chapter reviews a number of methodological solutions designed to solve this identification problem, including the use of longitudinal data (data on successive generations). If there are several phenotypes but only one genotype, the methodology of longitudinal data may be applied to observations on parents and children for a single generation. Other methodologies include quasi-experimentation, generated-regressor methodology, natural experimentation, and instrumental-variables estimation.
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