Proxy (statistics)

In statistics, a proxy or proxy variable is a variable that serves in place of an unobservable or immeasurable variable, while not being otherwise relevant in its own right. In order for a variable to be a good proxy, it must have a close correlation, not necessarily linear, with the variable of interest. This correlation might be either positive or negative.

Proxy variable must relate to an unobserved variable, must correlate with disturbance, and must not correlate with regressors once the disturbance is controlled for.