Suppose the variable has been omitted from the following regression equation, is the estimator obtained when is omitted from the equation. If is said to _____.
A)have an upward bias
B)have a downward bias
C) be unbiased
D) be biased toward zero

Question

Suppose the variable  has been omitted from the following regression equation,   is the estimator obtained when  is omitted from the equation. If  is said to _____.
A)have an upward bias 
B)have a downward bias 
C) be unbiased 
D) be biased toward zero

Quizplus · Accepted Answer

When a variable is omitted from a regression equation, the estimators obtained for the other variables may have a bias. In this case, since the variable 11eab06d_2524_6ff7_beed_a33b4b5c6031_TB2133_11 has been omitted, the estimator obtained for 11eab06d_2524_6ff8_beed_53f86ac3d4b1_TB2133_11 11eab06d_2524_6ff9_beed_637232a8a149_TB2133_11 will be biased upward, meaning it will overestimate the true effect of this variable. Therefore, the answer is A)have an upward bias. When the variable 11eab06d_2524_e52c_beed_4bd8605fae93_TB2133_11 is omitted from the following regression equation, 11eab06d_2524_e52d_beed_93ae92dd41a6_TB2133_11 11eab06d_2525_0c3e_beed_0f9d28fee4cb_TB2133_11 has an upward bias if E( 11eab06d_2525_0c3f_beed_c75b6ce5ae2d_TB2133_11 ) >â₁.

Suppose the Variable Has Been Omitted from the Following