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Mathematics, 04.12.2019 07:31 gototiger

Suppose that you are interested in estimating the ceteris paribus relationship between y and x1. for this purpose, you can collect data on two control variables, x2 and x3. (for concreteness, you might think of y as final exam score, x1 as class attendance, x2 as gpa up through the previous semester and x3 as sat or act score). let β˜ 1 be the simple regression estimate from y on x1 and let βˆ 1 be the multiple regression estimate from y on x1, x2, x3. (a) if x1 is highly correlated x2 and x3 in the sample and x2 and x3 have large partial effects on y, would you expect β˜ 1 and βˆ 1 to be very similar or very different? explain. (b) if x1 is almost uncorrelated with x2 and x3, but x2 and x3 are highly correlated, will β˜ 1 and βˆ 1 tend to be similar or very different? explain. (c) if x1 is highly correlated with x2 and x3, and x2 and x3 have small partial effects on y, would you expect se[ β˜ 1] or se[βˆ 1] to be smaller? explain.

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