article published Johannes Hollenbach author 946320009-0006-2008-0564 Hendrik Schmitz author 48879 Matthias Westphal author 281 department 475 department <jats:title>Abstract</jats:title> <jats:p>We study how gene-environment interactions between education and genetic endowments affect cognition in old age and use this setting to show that – even with a valid instrument – two-stage least squares (2SLS) estimates of interaction effects can be far away from the true effect. This is the case when treatment effects are heterogeneous and compliance to the instrument depends on the interaction variable. We suggest estimating marginal treatment effects to address this problem. Our estimation results show complementarities between education and genetic predisposition in determining later-life memory. The marginal treatment effect estimates suggest substantially larger gene-environment interactions than the 2SLS estimates.</jats:p> Oxford University Press (OUP)2026 eng 0013-0133 1468-029710.1093/ej/ueag010 Hollenbach, Johannes, et al. “Gene-Environment Interactions with Essential Heterogeneity.” <i>The Economic Journal</i>, ueag010, Oxford University Press (OUP), 2026, doi:<a href="https://doi.org/10.1093/ej/ueag010">10.1093/ej/ueag010</a>. Hollenbach J, Schmitz H, Westphal M. Gene-environment interactions with essential heterogeneity. <i>The Economic Journal</i>. Published online 2026. doi:<a href="https://doi.org/10.1093/ej/ueag010">10.1093/ej/ueag010</a> @article{Hollenbach_Schmitz_Westphal_2026, title={Gene-environment interactions with essential heterogeneity}, DOI={<a href="https://doi.org/10.1093/ej/ueag010">10.1093/ej/ueag010</a>}, number={ueag010}, journal={The Economic Journal}, publisher={Oxford University Press (OUP)}, author={Hollenbach, Johannes and Schmitz, Hendrik and Westphal, Matthias}, year={2026} } Hollenbach, J., Schmitz, H., &#38; Westphal, M. (2026). Gene-environment interactions with essential heterogeneity. <i>The Economic Journal</i>, Article ueag010. <a href="https://doi.org/10.1093/ej/ueag010">https://doi.org/10.1093/ej/ueag010</a> J. Hollenbach, H. Schmitz, and M. Westphal, “Gene-environment interactions with essential heterogeneity,” <i>The Economic Journal</i>, Art. no. ueag010, 2026, doi: <a href="https://doi.org/10.1093/ej/ueag010">10.1093/ej/ueag010</a>. Hollenbach, Johannes, Hendrik Schmitz, and Matthias Westphal. “Gene-Environment Interactions with Essential Heterogeneity.” <i>The Economic Journal</i>, 2026. <a href="https://doi.org/10.1093/ej/ueag010">https://doi.org/10.1093/ej/ueag010</a>. J. Hollenbach, H. Schmitz, M. Westphal, The Economic Journal (2026). 641082026-02-11T09:20:49Z2026-02-11T09:23:15Z