Non-classical measurement error with false positives and negatives

Non-classical measurement error caused by false positives and false negatives produces biased and inconsistent estimates in a regression. This is the case whether the mismeasured variable is a dependent or an explanatory variable, and having an IV does not always work. To tackle these limitations, this paper shows that proper adjustment of the mismeasured variable of interest produces consistent estimates. The paper also discusses alternatives when the key inputs to adjust the mismeasured variable are not known.