The use of genetic markers as instrumental variables (IV) is receiving increasing attention from economists,
statisticians, epidemiologists and social scientists. Although IV is commonly used in economics, the
appropriate conditions for the use of genetic variants as instruments have not been well defined. The
increasing availability of biomedical data, however, makes understanding of these conditions crucial to the
successful use of genotypes as instruments. We combine the econometric IV literature with that from
genetic epidemiology, and discuss the biological conditions and IV assumptions within the statistical
potential outcomes framework. We review this in the context of two illustrative applications.