Suppose we omit X₂ from the following in a bivariate model Y_i = $\beta$₀ + $\beta$₁X_1i + $\varepsilon$_i And suppose X₂ is negatively related to X₁ and $\beta$₂ is positive, while $\beta$₁is positive. What is the likely effect of omitting X₂ on our estimate of $\beta$₁? A) No effect; $\beta$₁hat will be unbiased. B) $\beta$₁hat will be more positive than it should be. C)$\beta$₁hat will be less positive than it should be. D) $\beta$₁hat will equal zero.

Question

Quizplus · Accepted Answer

Omitting a negatively related variable can lead to the coefficient of a positively related variable being underestimated. Therefore, the estimate of F1F1F1S1F1F1F10₁ will likely be less positive than it should be.

Suppose We Omit X2 from the Following in a Bivariate β\betaβ

Suppose We Omit X₂ from the Following in a Bivariate $\beta$