Which of the following are associated with larger omitted variable biases?
A) The dependent variable is measured with error.
B) The relationship between the included and excluded variables is weak.
C) The relationship between the included and excluded variables is strong.
D) The relationship between the excluded variable and the dependent variable is weak.

Question

Quizplus · Accepted Answer

When the relationship between the included and excluded variables is strong, the omitted variable bias will be larger. This is because the omitted variable is likely to be correlated with both the dependent variable and the included variables, which leads to a spurious or artificial relationship between the included variables and the dependent variable. Option A, B and D are not associated with larger omitted variable biases.

Which of the Following Are Associated with Larger Omitted Variable