# Questions tagged [omitted-variable-bias]

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17 questions with no upvoted or accepted answers
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### Question about statement in Oster (2019): variation in a control

In Oster (2019), she discusses how authors typically include controls and examine coefficient stability as a way to test for presence of confounding, and points out that researchers should consider ...
• 681
43 views

### Derivation of Neuhaus, Jewell(1993)

I wish to ask a derivation problem in Neuhaus, Jewell(1993) - "A geometric approach to assess bias due to omitted covariates in generalized linear models" The statistical True model dealt in ...
60 views

### Using an IV when there is more than one omitted variable

I am trying to estimate the following model: $$y=B_0 + B_1x_1 + B_2x_2 + B_3x_3 + e$$ However, I have an omitted variable bias because $x_2$ and $x_3$ are not observed. Situation 1 If I have an (...
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1 vote
53 views

### biased estimation of variable correlated with endogenous variable

I have the following model: $X = \alpha_1 + aZ + \epsilon_1 \\ Y = \alpha_2 + bZ + cX + \epsilon_2$ Suppose that $Z$ is randomly assigned but $X$ is correlated with the error term $\epsilon_2$, in ...
• 41
1 vote
24 views

### Test an instrument's correlation with unobservable when it's redundant in structural equation

I'm working on Wooldridge's “Econometric Analysis of Cross Section and Panel Data” and I don't fully get why this test would not work. I'll share my work with screenshots so it's clearer hope that's ...
1 vote
273 views

### Comparing IV and OLS results to get infomation about the omitted variable correlation

Very often in seminars people compare the (biased because of endogeneity) results of their OLS estimation with those (unbiased) from an IV strategy estimation. Assuming everything is ok with the IV ...
1 vote
54 views

### Does omitted variable bias affects coefficients for those variables that are not correlated with the error term? (When their is one variable that is)

Does omitted variable bias affects coefficients for those variables that are not correlated with the error term? (When there is one variable that is.) I found two answers, but they appear to be ...
1 vote
24 views

### Do insignificant variables result in a specification error?

I am trying to understand omitted variable bais better. I know that it detects irrelevant variables, but are irrelevant variables and insignificant variables synonymous here? If I have a regression ...
• 69
1 vote
102 views

### Instrument validity: does a positive and significant coefficient on Z in a regression of Y on X and Z pose a problem?

I have an initial regression of Y on X and Z. Both of my coefficients on X and Z are non-zero and strongly statistically significant. X and Z are correlated but I am told collinearity shouldn't be an ...
• 11
12 views

### Under what conditions are the remaining coefficients of a regression with a variable omitted "scaled" relative to those in the complete regression?

I was reading this article that discusses the impact of ommitting variable from a regression equation, and analyzes the impact it will have. Here is some notation they use: given a data matrix $X$, ...
• 408
48 views

### How to deal with possibly important predictors omitted during the building of an OLS multivariate linear regression model?

I am building a descriptive model using OLS multivariate linear regression. I have a couple dozen candidate predictors, but only around 200 cases. Since I wanted at least 10 cases / variable for the ...
18 views

### Endogeneity or omitted variable bias in a causal model

I am estimating a regression of the form: My variable of interest is "X1", and based on the information here I can confidently say that the goal of my analysis is a causal inference. Now to ...
24 views

### Endogenous omitted variable in the model

If I know about an omitted variable in the regression and the data for it is available. But I also know that this omitted variable is endogenous, because the dependent variable and the omitted ...
160 views

### Variance of linear regression model with omitted variable bias

Suppose we have the following data generation process: \begin{align*} U &= N_{U}\\ X_{1} &= \alpha_{1}U + N_{1}\\ X_{2} &= \alpha_{2}U + N_{2}\\ X_{3} &= \alpha_{3}U + ...
• 336
393 views

### VAR model variable selection

I'm required to use two time series models in my exam project. I want to use a stock price of an energy company, and then explain it first using ARIMA, and then adding other variables and using VAR. ...
21 views

### Question about regression and deriving omitted variables

usually when I see derivations of ommited variable bias, I see something of the sort: from y=xb + $\eta$, and looking at the for formula for the slope estimate: \$cov(x,y)$$/var(x) cov(x,xb+\eta )$$/...
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