Consider the following regression results: Income = 30+ 0.2Parental income + 5 Male + 0.001 Male x Parental income and the t-statistics are 3, 3, 3 and 0.2 for the four estimated coefficients (starting with $\beta$₀-hat). Which of the following conclusions is correct? A) Men are not estimated to have greater income than women. B) The fitted value for a man whose parents had 0 income is 30. C) We have no evidence that the effect of parental income differs for men and women. D) The effect of parental income on women is larger than for men.

Question

Quizplus · Accepted Answer

The t-statistics for the coefficients for S1U1B1 S1U1B0 and the interaction term with Male are all 3, indicating that they are statistically significant. However, the t-statistic for the coefficient for Male is only 0.2, indicating that it is not statistically significant. Therefore, we cannot conclude that men have greater income than women. The coefficient for S1U1B0 indicates that for a person whose parents had 0 income, their estimated income would be 30. The lack of significance in the interaction term suggests that the effect of parental income does not differ for men and women. Therefore, the correct conclusion is C. We cannot make a comparison of the effect of parental income between men and women, so option D is incorrect.

Consider the Following Regression Results: Income = 30 + 0 β\betaβ

Consider the Following Regression Results: Income = 30+ 0 $\beta$