(c) The scatterplot of the number of household members against log(income) and that of log(income) against the number of household members are as follows. What is the sign of the sample covariance between the two variables? Explain why you believe so. I_income hhd_mbrs 9 ∞ 6 2 0 10 2 20 4 hhd_mbrs I_income 30 6 8 40 (d) The exercises in Part II demonstrate what happens to the coefficient of log(income) if the number of household members (hhd_mbrs) is omitted. Given (a)-(c), what can you comment on the omitted variable bias of the coefficient of log(income) if hhd_mbrs is omitted? In particular, do you expect the coefficient of log(income) to be larger in a simple regression (with hhd_mbrs omitted) than in a multiple regression (with hhd_mbrs included)? Explain why you believe so.
(c) The scatterplot of the number of household members against log(income) and that of log(income) against the number of household members are as follows. What is the sign of the sample covariance between the two variables? Explain why you believe so. I_income hhd_mbrs 9 ∞ 6 2 0 10 2 20 4 hhd_mbrs I_income 30 6 8 40 (d) The exercises in Part II demonstrate what happens to the coefficient of log(income) if the number of household members (hhd_mbrs) is omitted. Given (a)-(c), what can you comment on the omitted variable bias of the coefficient of log(income) if hhd_mbrs is omitted? In particular, do you expect the coefficient of log(income) to be larger in a simple regression (with hhd_mbrs omitted) than in a multiple regression (with hhd_mbrs included)? Explain why you believe so.
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:(c) The scatterplot of the number of household members against log(income)
and that of log(income) against the number of household members are
as follows. What is the sign of the sample covariance between the two
variables? Explain why you believe so.
_income
hhd_mbrs
4
20
∞ -
6
0
10
2
20
4
hhd_mbrs
I_income
30
6
8
40
(d) The exercises in Part II demonstrate what happens to the coefficient of
log(income) if the number of household members (hhd_mbrs) is omitted.
Given (a)-(c), what can you comment on the omitted variable bias of the
coefficient of log(income) if hhd_mbrs is omitted? In particular, do you
expect the coefficient of log(income) to be larger in a simple regression
(with hhd_mbrs omitted) than in a multiple regression (with hhd_mbrs
included)? Explain why you believe so.
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