This note demonstrates that in applied regression analysis, the variance of a coefficient of interest may decrease from the inclusion of a control variable, contrasting with Clarke’s assertion (2005, 2009) that the variance can only increase or stay the same. Practitioners may thus be well advised to include a relevant control variable on this basis alone, particularly when it is weakly correlated with the variable of interest.
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GalianiSebastianGertlerPaulSchargrodskyErnesto. 2005. Water for life: The impact of the privatization of water services on child mortality. Journal of Political Economy113: 83–120.
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