# Omitted Variable Bias

*Math & Statistics — Finicade finance glossary*

Omitted variable bias occurs when a factor affecting the outcome and correlated with your predictor is left out, so its influence is misattributed.

Omitted variable bias occurs when a factor that affects the outcome and correlates with your predictor is left out of the model, so its influence is wrongly attributed to what you did include. It's the reason the classic finding that coffee causes heart disease evaporated once smoking was controlled for. Direction and size are predictable from the signs involved, which is why good empirical work argues explicitly about what's missing.

**Also known as:** OVB, confounding variable, confounder

**Related terms:** [Endogeneity](https://finicade.com/glossary/endogeneity), [Instrumental Variable](https://finicade.com/glossary/instrumental-variable), [Correlation vs Causation](https://finicade.com/glossary/correlation-vs-causation), [Regression](https://finicade.com/glossary/regression), [Selection Bias](https://finicade.com/glossary/selection-bias)

**Taught in:** Regression Range — Omitted Variable Bias

Source: https://finicade.com/glossary/omitted-variable-bias