Truncated sample

Updated: Aug 20, 2021

A sample from which some observations have been systematically excluded, in other words, a sample drawn from a restricted part of population, rather than from the entire population. An example is a sample of households with income below a certain level: the households with income above that specified level are systematically excluded. In this case, if the dependent variable is income, applying ordinary least squares to the truncated sample renders the estimators inconsistent.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.