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Letís Take the Bias Out of Econometrics

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  • Duo Qin

    () (Department of Economics, SOAS, University of London, UK)

Abstract

This study exposes the specious quality of ëendogeneity biasí. It reviews how conceptualisation of the bias has evolved to embrace all major econometric problems, despite extensive lack of hard evidence. It reveals the crux of the bias ñ a priori rejection, as conditionally invalid, of explanatory variables in causal postulates of interest, and of the bias correction by consistent estimators ñ modification of those variables by non-uniquely and non-causally generated regressors. It demonstrates cognitive flaws in this estimator-centred approach and highlights the need to shake off the bias to let statistical learning play an active role in designing causally faithful models.

Suggested Citation

  • Duo Qin, 2015. "Letís Take the Bias Out of Econometrics," Working Papers 192, Department of Economics, SOAS, University of London, UK.
  • Handle: RePEc:soa:wpaper:192
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    File URL: https://www.soas.ac.uk/economics/research/workingpapers/file117753.pdf
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    References listed on IDEAS

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    6. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 11-44, August.
    7. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, March.
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    More about this item

    Keywords

    simultaneity; omitted variable; self-selection; multicollinearity; consistency; causal model; conditioning;

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General
    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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