How to Use Proxy Variables in a Regression Model

Direct image of a supermassive black hole at the core of Messier 87 (Source: Wikipedia under CC BY 4.0)

How to use proxies in place of variables that cannot be observed

Sometimes, one or more explanatory variables in a regression model cannot be observed or measured. In this article, we’ll look at how to use proxy variables in place of such unmeasurable variables. We’ll explain what makes for a good versus a bad proxy. And we’ll examine the tradeoff …

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