Omitted variable bias

Question

Hi, What should we do in a scenario where we need to include the extra variable but addition of it decreases the adjusted R squared value?

Answer 1

Hello Mohammad,

Thanks for reaching out.

There are fields of study in which its experts include all the variables in a regression model even if its estimated parameters are non-significant. It actually depends on the researcher or analyst whether to include or not non-significant predictors in a regression.

Hope this helps.
Best,
The 365 Team

Omitted variable bias

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