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anly461_omitted_variable's Introduction

PURPOSE

  • The purpose of this notebook is to model two OLS regression models. Model 1 is properly specified based on the toy data and Model 2 has an omitted variable, $x_3$.
  • This notebook will demonstrate why $R^2$ is a deceptive metric.
  • RMSE metric and residual plots are better model diagnostic tools than $R^2$
  • Brandon Johnson

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