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An economist regresses test scores (Y) on school funding (X) across 500 schools: , suggesting a $1,000 funding increase correlates with 0.5-point higher scores. Schools in wealthy districts receive higher funding AND have more educated parents. Why does this regression likely overestimate the causal effect of funding?
An economist regresses test scores (Y) on school funding (X) across 500 schools: , suggesting a $1,000 funding increase correlates with 0.5-point higher scores. Schools in wealthy districts receive higher funding AND have more educated parents. Why does this regression likely overestimate the causal effect of funding?