A latent variable is one that:
A) can be used instead of an instrumental variable in two-stage least squares.
B) will cause multi-collinearity problems.
C) cannot be observed, but information about it can be inferred from other observed variables.
D) will create endogeneity problems in your regression model.

Question

Quizplus · Accepted Answer

A latent variable is one that cannot be observed directly, but can be inferred from other observed variables. It is commonly used in fields like psychology, where traits like intelligence or personality cannot be directly measured but can be inferred from other observable behaviors or characteristics. It is not related to instrumental variables, multi-collinearity, or endogeneity problems in regression models.

A Latent Variable Is One That