# Omitted Variable Bias: Violation of CLRM–Assumption 3: Explanatory Variables must be exogenous

One reason why the omitted variable leads to biased estimates is that omitting a relevant variable violates assumption 3 of the necessary assumptions of the classical regression model that states that all explanatory variables must be exogenous, i.e.

$E(\epsilon_{i}|X)=0$

From this post, we know that omitting a relevant variable from the regression causes the error term and the explanatory variables to be correlated.
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$y = \alpha + \beta_{1} x_{1}$