The possibility of gene-environment interaction can be exploited to identify genetic variants associated with disease using a joint test of genetic main effect and gene-environment interaction. We consider how exposure misclassification and dependence between the true exposure E and the tested genetic variant G affect this joint test in absolute terms and relative to three other tests: the marginal test (G), the standard test for multiplicative gene-environment interaction (GE), and the case-only test for interaction (GE-CO). All tests can have inflated Type I error rate when E and G are correlated in the underlying population. For the GE and G-GE tests this inflation is only noticeable when the gene-environment dependence is unusually strong; the inflation can be large for the GE-CO test even for modest correlation. The joint G-GE test has greater power than the GE test generally, and greater power than the G test when there is no genetic main effect and the measurement error is small to moderate. The joint G-GE test is an attractive test for assessing genetic association when there is limited knowledge about casual mechanisms a priori, even in the presence of misclassification in environmental exposure measurement and correlation between exposure and genetic variants.

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