Mathematics, 07.10.2020 23:01 Mimix2k
A researcher plans to study the causal effect of police on crime, using data from a random sample of U. S. counties. He plans to regress the county’s crime rate on the (per capita) size of the county’s police force. (a) Explain why this regression is likely to suffer from omitted variable bias. Which variables would you add to the regression to control for important omitted variables? (b) Use your answer to (a) and the expression for omitted variable bias on slide 5 of the slides on Chapter 6 (it is also Equation (6.1) in SW) to determine whether the regression will likely overor underestimate the effect of police on the crime rate. That is, do you think that βb 1 > β1 or βb 1 < β1 ?
Answers: 1
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A researcher plans to study the causal effect of police on crime, using data from a random sample of...
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