How can I reduce omitted variable bias in my research?

How can I reduce omitted variable bias in my research?

To reduce omitted variable bias, ensure you include all relevant variables in your model. Consider using techniques like instrumental variables or fixed effects.

What are instrumental variables?

Instrumental variables are used in regression analysis to account for unobserved variables that may affect the outcome. They help isolate the causal effect of the independent variable.

Can you give an example of using an instrumental variable?

Sure! If you're studying the effect of education on income, you might use proximity to colleges as an instrumental variable, assuming it affects education but not directly income.

What if I can't find a good instrumental variable?

If a good instrumental variable is hard to find, consider using panel data or conducting a randomized controlled trial if feasible.