Questions tagged [omitted-variable-bias]

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Does confounding always imply endogeneity?

I'm a bit confused with the definitions regarding causal inference. My question is whether we can call measured confounding an endogeneity problem?
• 31
5k views

Omitted variable bias vs. Multicollinearity

There's seems to be a bit like catch 22: suppose I am doing linear regression, and I have 2 variables that are highly correlated. If I use both in my model, I will suffer from multicollinearity, but ...
• 3,520
3k views

Difference Omitted Variable Bias and Confounding?

Is there a difference between omitted variable bias and confounding bias in linear models? To my knowledge, when investigating the causal effect of $X$ on $Y$, a confounder is a variable $Z$ that is ...
• 317
336 views

How is the omitted variable bias formula derived?

I see it is often quoted that the omitted variable bias formula is $$\text{Bias}\left(\widehat{\beta_1}\right) = \beta_2 \cdot \text{Corr}\left(X_2,X_1\right)$$ where $\widehat{\beta_1}$ is the ...
• 4,438
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Using a DAG to understand omitted variable bias in OLS vs Binary Dependent Variable Regression

Suppose I have three variables. $A$ and $U$ are continuous variables but $U$ is unobserved. $Y$ is the binary outcome. $A$ and $U$ are independent. Let the true model be from the typical probit or ...
• 41
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What would it take for the omitted-variable bias from multiple omitted variables to cancel out?

Let's stick to ordinary least squares linear regression for now, and assume the typical conditions for the Gauss-Markov theorem. If it is helpful to assume Gaussian errors, that's fine. In such a ...
• 65.1k