Which of the following is a difference between least absolute deviations (LAD) and ordinary least squares (OLS) estimation?
A)OLS is more computationally intensive than LAD.
B)OLS is more sensitive to outlying observations than LAD.
C)OLS is justified for very large sample sizes while LAD is justified for smaller sample sizes.
D)OLS is designed to estimate the conditional median of the dependent variable while LAD is designed to estimate the conditional mean.

Question

Quizplus · Accepted Answer

OLS is more sensitive to outliers because it minimizes the sum of the squares of the residuals, which disproportionately increases the influence of outliers. LAD minimizes the sum of the absolute differences, making it less sensitive to outliers.

Which of the Following Is a Difference Between Least Absolute