1. Business
  2. Economics
  3. suppose you are interested in estimating how health affects productivity...

Question: suppose you are interested in estimating how health affects productivity...

Question details

Suppose you are interested in estimating how health affects productivity. Specifically, you are interested in the following regression: 2)

where Yi is a variable representing the income earned by person i, and Xi is a variable representing the health of person i.

Income is a fairly straightforward concept to capture. Health, however, is a more complex concept that can be measured in many different ways. For example, body mass index (BMI - weight in kilograms, divided by height in meters squared) is one indicator of health. People with very low BMI are considered underweight (which is typically not healthy) and people with very high BMI are considered overweight (which is typically not healthy).

9. Name one omitted variable that could be creating an endogeneity problem in regression 1 for the United States. If this particular omitted variable were the only issue, how would this affect your estimate of Bı (in particular, how would it compare to the true Bi). 10. Describe one way in which reverse causality might be a problem in these regressions?

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution