Non-classical Measurement Error with False Positives and Negatives

Non-classical measurement error with false positives and negatives produces biased and inconsistent estimates. This is the case whether the mismeasured variable is a dependent or an explanatory variable. Moreover, having an IV does not fix this issue. Instead, this paper shows that proper adjustment of the variable of interest produces biased but consistent estimates when the variable of interest is used as an explanatory variable, and unbiased and consistent estimates when the variable of interest is used as a dependent variable