The Phantom Menace of Omitted Variables – A Comment
This note demonstrates that in applied regression analysis, the variance of a coeffi cient of interest may decrease from the inclusion of a control variable, contrasting with Clarke’s assertion (2005, 2009) that the variance can only increase or stay the same. Practitioners may thus be well-advised to include a relevant control variable on this basis alone, particularly when it is weakly correlated with the variable of interest.
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- Kevin A. Clarke, 2005. "The Phantom Menace: Omitted Variable Bias in Econometric Research," Conflict Management and Peace Science, Peace Science Society (International), vol. 22(4), pages 341-352, September.
- Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005.
"Water for Life: The Impact of the Privatization of Water Services on Child Mortality,"
Journal of Political Economy,
University of Chicago Press, vol. 113(1), pages 83-120, February.
- Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2002. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Working Papers 54, Universidad de San Andres, Departamento de Economia, revised Sep 2005.
- Roderick J. Little & Qi Long & Xihong Lin, 2009. "A Comparison of Methods for Estimating the Causal Effect of a Treatment in Randomized Clinical Trials Subject to Noncompliance," Biometrics, The International Biometric Society, vol. 65(2), pages 640-649, 06.
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