2) Practice with Omitted Variable Bias

For each of these causal statements, identify one potential source of omitted variables bias and determine the direction of the bias.

Example: Studies show that going vegan increases your lifespan by 2 years.

• Omitted variable: Income - a vegan lifestyle is more expensive and those who can afford it are typically better off and have better health outcomes for a variety of other reasons. Income is positively correlated with income and health, so the bias overstates the relationship between veganism and lifespan.

a. Getting a degree in economics increases your future income by $5,000 per year.

b. Test scores at Lakewood Elementary increased by 5% after the school implemented an afterschool tutoring program.

c. Increasing suspension rates by 5% decreases student test scores by 1%.

d. College students who use laptops in class do 5% worse on final exams.