A convenient omitted variable bias formula for treatment effect models

C-Tier
Journal: Economics Letters
Year: 2019
Volume: 174
Issue: C
Pages: 84-88

Score contribution per author:

1.009 = (α=2.02 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

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 magnitude, of the bias. In a simple setting, this OVB is based on mutually exclusive binary variables, however I provide an extension which loosens the need for mutual exclusivity of variables, deriving the bias in difference-in-differences style models with an arbitrary number of included and excluded “treatment” indicators.

Technical Details

RePEc Handle
repec:eee:ecolet:v:174:y:2019:i:c:p:84-88
Journal Field
General
Author Count
1
Added to Database
2026-01-25