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Omitted variable bias of Lasso-based inference methods: A finite sample analysis

Kaspar Wuthrich, Ying Zhu

arXiv 20 Mar 2019 · Mathematics — Statistics Theory · publishedThe Review of Economics and Statistics (2021) · 5 citations (OpenAlex)

arXiv:1903.08704 · PDF · DOI · OpenAlex · Extracted main text

Abstract

We study the finite sample behavior of Lasso-based inference methods such as post double Lasso and debiased Lasso. We show that these methods can exhibit substantial omitted variable biases (OVBs) due to Lasso not selecting relevant controls. This phenomenon can occur even when the coefficients are sparse and the sample size is large and larger than the number of controls. Therefore, relying on the existing asymptotic inference theory can be problematic in empirical applications. We compare the Lasso-based inference methods to modern high-dimensional OLS-based methods and provide practical guidance.

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65
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148
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Alexandre Belloni, Daniel Chen, Victor Chernozhukov, and Christian H… (2012) Sparse models and methods for optimal instruments with an application to eminent domain1.00074100%
2Peter J. Bickel, Ya'acov Ritov, and Alexandre B. Tsybakov Simultaneous analysis of lasso and dantzig selector1.00064100%
3Alexandre Belloni, Victor Chernozhukov, Iván Fernández-Val, and Chri… (2017) Program evaluation and causal inference with high-dimensional data1.00063100%
4Alexandre Belloni, Victor Chernozhukov, and Christian Hansen (2014) Inference on treatment effects after selection among high-dimensional controls0.95624988%
5Victor Chernozhukov, Denis Chetverikov, Mert Demirer, Esther Duflo,… (2018) Double/debiased machine learning for treatment and structural parameters0.92843100%
6Martin J. Wainwright (2009) Sharp thresholds for high-dimensional and noisy sparsity recovery using $ _1$-constrained quadratic programming (lasso)0.9209478%
7Matias D. Cattaneo, Michael Jansson, and Whitney K. Newey (2018) Inference in linear regression models with many covariates and heteroscedasticity0.87452100%
8Joshua D. Angrist and Brigham Frandsen (2019) Machine labor0.8434475%
9Soumendra N. Lahiri (2021) Necessary and sufficient conditions for variable selection consistency of the lasso in high dimensions0.81142100%
10Roland G. Fryer and Steven D. Levitt (2013) Testing for racial differences in the mental ability of young children0.73732100%

Showing the top 10 of 65 scored citations.

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5High Dimensional Time Series Regression Models: Applications to Statistical Learning Methods0.40511
6The Fragility of Sparsity0.40511
7Double/Debiased CoCoLASSO of Treatment Effects with Mismeasured High-Dimensional Control Variables0.40511
8The Post Double LASSO for Efficiency Analysis0.40511
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