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Omitted Variable Bias

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PPGPortal > Home > Concept Dictionary > N, O > Omitted Variable Bias
 

Omitted Variable Bias  

The average effect of X on Y is biased if other variables that determine Y and are correlated with X are left out of the regression model.

(Phil Oreopoulos, Toronto PPG 1004H)

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Omitted variable bias is also referred to as the problem of excluding a relevant variable or underspecifying the model.

The conditions for omitted variable bias in multiple regression are similar to those for a single conditional variable: if an omitted variable affects Y and is correlated with at least one of the conditional variables, then the value of the coefficient of interest will be biased for causal interpretations.

 

 

     

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