Using a proxy variable can be appropriate in all of the following settings except estimating a:
A) multiple linear regression.
B) regression with both treatment and control variables.
C) regression where the outcome is measured with error.
D) regression where the proxy is uncorrelated with confounding factor causing the endogeneity problem.

Question

Quizplus · Accepted Answer

Using a proxy variable as a substitute for a confounding variable is only appropriate if the proxy is correlated with the confounding variable. If the proxy is uncorrelated with the confounding factor causing the endogeneity problem, it cannot be used as a substitute and other methods such as instrumental variable analysis would need to be considered.

Using a Proxy Variable Can Be Appropriate in All of the Following