## Tuesday, March 18, 2014

### Omitting Constant may Introduce Biased Coefficients

It is well known that dropping the constant in regression analysis may introduce bias. However, bias is really not the deeper issue.  The deeper issue is that by omitting the constant, you are specifying a very specific form for the relationship between y and x.  In particular this form is that when x equals 0, the expected value of y must also be equal to 0.  It is very hard to think of examples outside of geometric proofs when this should be the case.

Let's see this in action.