Failure to include the proper set of predictor variables can lead to coefficient bias and incorrect coefficient signs.

Question

Quizplus · Accepted Answer

This statement is true. If important predictor variables are not included in a regression model, the estimated coefficients for the included variables may be biased and have incorrect sign. This is known as omitted variable bias. Including all relevant predictor variables in a regression model is important to obtain accurate and reliable coefficient estimates.

Failure to Include the Proper Set of Predictor Variables Can