# Question: a you collect data on a random sample of individuals...

###### Question details

a) You collect data on a random sample of individuals’ years of
schooling and health. You regress health on schooling

and find a positive coefficient. Can you conclude from this
estimate that getting more education causes an increase

in health (Yes or no)? Justify your answer.

b) You have a cross-sectional dataset that includes individuals’
education and wages. Explain what it means to have a

“ceteris paribus” estimate of the effect of education on
wages.

c) You are interested in predicting the outcome of an election
(share of votes for Democrats). You send out a poll to a

random sample of individuals subscribed to “The Economist” asking
who they will vote for in the upcoming

election.

i. Is this sample affected by selection bias? Yes or no. If yes, in
which direction is this likely to bias your

estimates? Justify your answer.

ii. Is this sample affected by response bias? Yes or no. If yes, in
which direction is this likely to bias your

estimates? Justify your answer.

d) You have a random sample of 10,000 households’ net worth (i.e.
value of assets owned by household members

minus the liabilities (debts) they owe) in the US. You find that
mean net worth is 5 times higher than median net

worth. What does this tell you about the shape of the wealth
distribution in the US? Are there more observations to

the left or to the right of the mean? Do you think the left or the
right tail is longer?

e) Using the random sample of question 1d. above, you calculate a
sample mean net worth of $600,000. What does the

Central Limit Theorem tell us about this value relative to the true
mean net worth in the US population?