Homework answers / question archive / A researcher plans to study the causal effect of police on crime, using data from a random ? sample of U

A researcher plans to study the causal effect of police on crime, using data from a random ? sample of U

Economics

Share With

A researcher plans to study the causal effect of police on crime, using data from a random ? sample of U.S. counties. He plans to regress the county's crime rate on the (per capita) size of the county's police force. a) Explain why this regression is likely to suffer from omitted variable bias. Which variables would you add to the regression to control for important omitted variables? (2 marks) b) Use your answer to (a) and the expression for omitted variable bias given in the expression below to determine whether the regression will likely over-or underestimate the effect of police on the crime rate. That is, do you think that B1 > Bor B1 < B1 - discuss. (2 marks) Tu B Bi + PXu Ox c) Is R2 distinct from R2? Discuss which one would be more appropriate in the context of multiple regression and why.