Amenities and Fringe Benefits: Omitted Variable Bias

Omitted variable bias and hospital costs.

This research examines the impact of omitted variables on the accuracy of parametric hospital cost function estimations based on Québec hospital level data. We assess the effect of omitted variables resulting from incomplete data on technology and performance measurement and on tests of the cost minimizing behavior of the institution. Our results show that important characteristics of hospital ...

A Convenient Omitted Variable Bias Formula for Treatment Effect Models

Generally, determining the size and magnitude of the omitted variable bias (OVB) in regression models is challenging when multiple included and omitted variables are present. Here, I describe a convenient OVB formula for treatment effect models with potentially many included and omitted variables. I show that in these circumstances it is simple to infer the direction, and potentially the magnit...

An Embarrassment of Riches: Confronting Omitted Variable Bias and Multi-Scale Capitalization in Hedonic Price Models

Many researchers have addressed concerns of omitted variable bias in hedonic price models through the use of spatial fixed effects. We argue that this approach does not consider the biases introduced by effects that overlap the zone of capitalization for the non-market good. We show this bias can dominate the usual omitted variable bias using data on developer-provided open space. We control fo...

Correcting for Omitted-Variable and Measurement-Error Bias in Autoregressive Model Estimation with Panel Data

The parameter estimates based on an econometric equation are biased and can also be inconsistent when relevant regressors are omitted from the equation or when included regressors are measured with error. This problem gets complicated when the ‘true’ functional form of the equation is unknown. Here, we demonstrate how auxiliary variables, called concomitants, can be used to remove omitted-varia...

Schooling Behaviors or Prior Skills? A Cautionary Tale of Omitted Variable Bias Within Oppositional Culture Theory