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DS4PS / cpp-523-spr-2020

Course shell for CPP 523 Foundations of Program Evaluation I for Spring 2020.
https://ds4ps.org/cpp-523-spr-2020/
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Lab 4 Part 2 #18

Open babsr opened 4 years ago

babsr commented 4 years ago

I have been trying to figure this out all weekend. How do you figure out what a1 is? I don't understand.

lecy commented 4 years ago

If you have an omitted variable X2:

Y = B0 + B1X1 + B2X2 
Y = b0 + b1X1

It comes from the auxiliary regression: 

X2 = a0 + a1X1

Here is a worked-through example:

https://ds4ps.org/cpp-523-spr-2020/lectures/walk-through/omitted-variable-bias-example.html

Or a longer VIDEO if helpful.