The Phantom Menace of Omitted Variables – a Comment

Posted: 14 Sep 2011

See all articles by Nolan Ritter

Nolan Ritter

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Date Written: September 1, 2011

Abstract

This note demonstrates that in applied regression analysis, the variance of a coefficient of interest may decrease from the inclusion of a control variable, contrasting with Clarke’s assertion (2005, 2009) that the variance can only increase or stay the same. Practitioners may thus be well-advised to include a relevant control variable on this basis alone, particularly when it is weakly correlated with the variable of interest.

Keywords: Control variables, variance, model specification

JEL Classification: C12, C15, C18

Suggested Citation

Ritter, Nolan and Vance, Colin, The Phantom Menace of Omitted Variables – a Comment (September 1, 2011). Available at SSRN: https://ssrn.com/abstract=1927267 or http://dx.doi.org/10.2139/ssrn.1927267

Nolan Ritter (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Colin Vance

Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany
0049-201-8149-237 (Phone)

HOME PAGE: http://www.rwi-essen.de

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
19
Abstract Views
493
PlumX Metrics