THE EFFECT OF MATERNAL DRUG-USE ON BIRTH-WEIGHT - MEASUREMENT ERROR IN BINARY VARIABLES

We develop a method to correct for non-random measurement error in a b inary indicator of illicit drugs. Our results suggest that estimates o f the effect of self-reported prenatal drug use on birth weight are bi ased upwards by measurement error-a finding contrary to predictions of a model of random measurement error. More accurate estimates of the t rue effect of drug use on birth weight can be obtained by using the pr edicted probability of falsely reporting drug use. Thus out-of-sample information on drug use may improve estimates of the effect of reporte d drug use in other settings.