Question: You are interested in the causal effect of a variable X on an outcome Y. You regress Y on X and get the following regression

You are interested in the causal effect of a variable X on an outcome Y. You regress Y on X and get the following regression result: Y = 4.3 8.1X. A colleague criticizes the lack of flexibility of your functional form choice, and insists you add X 2, X 3, X 4, and X 5 in your regression equation. While such additions maybe warranted, provide two reasons why adding these additional powers of X could be problematic.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!