ReadingRecap

Including Irrelevant Variables

Overspecifying
the model

g pothttp
antxz Y
this means that Bz o

the unbiasedness
Consequence It does not affect
of the estimators Bo and B
continue to be unbiased
but it does affect its variances

Ommited Variables
Consequence Causes the estimators to be biased
calculate
fist
Y potpix thyme
H
Y potpix V V Batz tu

Bias Bn
figs omitted variable bias
 Lwiglfibeybiased
Bi o 5 0
X does not
the
shagging
appear in
regression

How do we classify the bias in when Xz is omitted

B
o

g
mofet.it
Be O
ne bias the bias

to be able to classify it we need to find B and

corr X XD from 7

HOW DO WE WORD IT

ex Therefore because Paso and Corr xx o

then onaverage
p has a positive bias
E B p B has an upward bias

downward bias
E pi e
Bi p has a

if pi o and E pi p then
p o
B is biased toward zero

pi
jE
iEgil if Pico and
B
Elf
is biased toward
p
zero
then