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Deleting an observation a common strategy for handling a case in which an observation is missing data for one or more variables is to fill those missing variables with 0s and add a variable to the model that takes the value 1 for that one observation and 0 for all other observations. Show that this ‘strategy’ is equivalent to discarding the observation as regards the computation of b but it does have an effect on R2. Consider the special case in which X contains only a constant and one variable. Show that replacing missing values of x with the mean of the complete observations has the same effect as adding the new variable. |
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