The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education.
Savings = α + β₁Edu + β₂Inc + ε
The variable ‘Edu’ takes a value of 1 if the person is educated, and 0 otherwise; and the variable ‘Inc’ measures the income of the individual (in $).
Refer to the model above. If β₁ > 0, _____.

Question

The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education.

Savings = α + β₁Edu + β₂Inc + ε

The variable ‘Edu’ takes a value of 1 if the person is educated, and 0 otherwise; and the variable ‘Inc’ measures the income of the individual (in $).

Refer to the model above. If β₁ > 0, _____.

Answer

educated people have higher savings than those who are not educated

Answer

individual with lower income have higher savings

Answer

individuals with lower income have higher savings

Answer

uneducated people have higher savings than those who are educated

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The following simple model is used to determine the annual savings of an indivi...

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