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Walk me through instrumental variables: what makes an instrument valid, and how do two-stage least squares and LATE work?

IV is the causal tool people name but can't defend. The signal is articulating the two conditions an instrument must satisfy, why one is testable and one is not, and what 2SLS actually estimates. Here is the answer.

Updated Aug 2026 · Grounded in real Applied AI Engineer interview loops and written to a senior-engineer editorial bar.

IV is the causal tool people name but can't defend. The signal is articulating the two conditions an instrument must satisfy, why one is testable and one is not, and what 2SLS actually estimates. Here is the answer.

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