Even if we don't observe a variable, we can make informed speculations about the effect of omitting the variable on coefficients on variables we do observe.

Question

Quizplus · Accepted Answer

This statement is true. When we omit a variable from a regression model, the coefficients of the remaining variables may change. This is known as omitted variable bias. However, we can still make informed speculations about the potential effect of this bias on the coefficients of the remaining variables based on our understanding of the relationship between the omitted variable and the other variables in the model.

Even If We Don't Observe a Variable, We Can Make