Question

g True or False: We will not have omitted variable bias if we leave out a RHS variable that affects the LHS variable, provided there is no correlation between the omitted RHS variable and the included RHS variables.

Answer 1

Based on the information given, it should be noted that we will have an omitted variable bias, therefore, it's true.

What is an omitted variable?

An omitted variable simply occurs when a statistical model that occurs when one or more relevant variable is left out.

It should be noted that we will have omitted variable bias if we leave out a RHS variable that affects the LHS variable, even in a situation where there is no correlation between the omitted RHS variable and the included RHS variables.

For omitted variable bias to occur, it should be noted that the omitted variable will be correlated with the included regressor.

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