The Phantom Menace: Omitted Variable Bias in Econometric Research

Abstract

Quantitative political science is awash in control variables. The justification for these bloated specifications is usually the fear of omitted variable bias. A key underlying assumption is that the danger posed by omitted variable bias can be ameliorated by the inclusion of relevant control variables. Unfortunately, as this article demonstrates, there is nothing in the mathematics of regression analysis that supports this conclusion. The inclusion of additional control variables may increase or decrease the bias, and we cannot know for sure which is the case in any particular situation. A brief discussion of alternative strategies for achieving experimental control follows the main result.