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.
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