Choose best answer and briefly explain your reasoning 9. Suppose you are interes

Question

Choose best answer and briefly explain your reasoning

9. Suppose you are interested in the effect of class attendance on college performance, and plan to estimate the following model qrtG PA = + skipped + u, where qrtiGPA is quarter GPA and skipped is the percentage of classes skipped per quarter. Due to lack of information, students' motivation is omitted from the regression. Assume that more motivated students are less likely skip classes. OLS estimator of the coefficient for skipped will most likely a) be unbiased, but less effiicent. b) be biased, and the impact of skipped on qrtGPA will be overestimated. c) be biased, and the impact of skipped on qrtGPA will be underestimated. d) be biased, but the bias can go either direction.

Explanation / Answer

Ans is D

Due to exclusion of relevant variable,ols estimator becomes biased and thus biasedness can go on either side

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