Errors-in-variables bias
A)is present when the probability limit of the OLS estimator is given by $\hat { \beta } _ { 1 }\stackrel { p } { \longrightarrow }
\beta _ { 1 } + \frac { \sigma _ { x } ^ { 2 } } { \sigma _ { x } ^ { 2 } + \sigma _ { w } ^ { 2 } }$
B)arises when an independent variable is measured imprecisely.
C)arises when the dependent variable is measured imprecisely.
D)always occurs in economics since economic data is never precisely measured.

Question

Errors-in-variables bias
A)is present when the probability limit of the OLS estimator is given by $\hat { \beta } _ { 1 }\stackrel { p } { \longrightarrow }
 \beta _ { 1 } + \frac { \sigma _ { x } ^ { 2 } } { \sigma _ { x } ^ { 2 } + \sigma _ { w } ^ { 2 } }$
B)arises when an independent variable is measured imprecisely.
C)arises when the dependent variable is measured imprecisely.
D)always occurs in economics since economic data is never precisely measured.

Quizplus · Accepted Answer

Errors-in-variables bias specifically arises when an independent variable in a regression model is measured with error, not when the dependent variable is measured imprecisely or due to the general imprecision of economic data.

Errors-In-Variables Bias A)is Present When the Probability Limit of the OLS

Errors-In-Variables Bias
A)is Present When the Probability Limit of the OLS