Ruhr Economic Papers

Ruhr Economic Papers #282

The Phantom Menace of Omitted Variables – A Comment

by Nolan Ritter and Colin Vance

RWI, 09/2011, 10 S./p., 8 Euro, ISBN 978-3-86788-327-6

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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.

JEL-Classification: C12, C15, C18

Keywords: Control variables; variance; model specification

Published as:

Vance, C. and N. Ritter (2012), The Phantom Menace of Omitted Variables: A Comment. Conflict Management and Peace Science 29 (2): 233-238. DOI: 10.1177/0738894211433169  download

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