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The Phantom Menace of Omitted Variables

Author

Listed:
  • Colin Vance
  • Nolan Ritter

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.

Suggested Citation

  • Colin Vance & Nolan Ritter, 2012. "The Phantom Menace of Omitted Variables," Conflict Management and Peace Science, Peace Science Society (International), vol. 29(2), pages 233-238, April.
    • Handle: RePEc:sae:compsc:v:29:y:2012:i:2:p:233-238
    DOI: 10.1177/0738894211433169
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    References listed on IDEAS

    as
    1. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    2. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    3. Roderick J. Little & Qi Long & Xihong Lin, 2009. "A Comparison of Methods for Estimating the Causal Effect of a Treatment in Randomized Clinical Trials Subject to Noncompliance," Biometrics, The International Biometric Society, vol. 65(2), pages 640-649, June.
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    Cited by:

    1. Arndt R. Reichert, 2015. "Obesity, Weight Loss, and Employment Prospects: Evidence from a Randomized Trial," Journal of Human Resources, University of Wisconsin Press, vol. 50(3), pages 759-810.
    2. Arndt Reichert, 2012. "Obesity, Weight Loss, and Employment Prospects – Evidence from a Randomized Trial," Ruhr Economic Papers 0381, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. Kevin A. Clarke, 2012. "More Phantom Than Menace1," Conflict Management and Peace Science, Peace Science Society (International), vol. 29(2), pages 239-241, April.
    4. Simora, Michael & Frondel, Manuel & Vance, Colin, 2018. "Does financial compensation increase the acceptance of power lines? Evidence from Germany," Ruhr Economic Papers 742, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. repec:zbw:rwirep:0381 is not listed on IDEAS
    6. Simora, Michael & Frondel, Manuel & Vance, Colin, 2020. "Do financial incentives increase the acceptance of power lines? Evidence from Germany," Regional Science and Urban Economics, Elsevier, vol. 85(C).

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