1 Discuss directionality of the bias if any introduced by le

1. Discuss directionality of the bias (if any) introduced by leaving a variable out of equation in each of the following cases (Hint: use the formula for Bias):

a). You are trying to model average test score across different elementary schools as a function of average class size to determine whether smaller classrooms are more beneficial to students’ performance but you forgot to include poverty rate in the school district in your model (that is poverty rate is now part of the error term). Would you expect the coefficient for class room size (measured by the number of students per teacher) to be biased? If yes, discuss directionality of the bias.

b). You are trying to model the relationship between students’ performance in elementary school and number of books each kid owns at home to determine whether providing books to kids for free would increase their performance in school. But you forgot to include parental education into your equation. Would you expect the coefficient for the number of books to be biased? If yes, discuss directionality of the bias.

c). You are modeling the relationship between BMI (Body Mass Index) and amount of physical exercise each person gets to determine whether exercising improves one’s BMI. But you forgot to include a dummy for whether a person suffers from any chronic health issues that would limit his/her ability to exercise. Would you expect the coefficient for the dummy to be biased? If yes, discuss directionality of the bias.

Solution

Would you expect the coefficient for class room size (measured by the number of students per teacher) to be biased?

NO BECAUSE I FORGOT TO PUT SOME VARIABLE IN THE EQUATION

Would you expect the coefficient for the number of books to be biased?

NO BECAUSE I FORGOT TO PUT SOME VARIABLE IN THE EQUATION

Would you expect the coefficient for the dummy to be biased?

NO BECAUSE I FORGOT TO PUT SOME VARIABLE IN THE EQUATION