# problem set #2.docx - Group 3: Soojee Lee Hans Kasim ...

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Group 3:Soojee Lee, Hans Kasim, Monica Zhao, Mariela CentenoProblem Set# 21. “Bridging the Savings Gap”: Interaction Terms in Regressionsa.i.Information (X1i) and Education (X2i) are the independent variables.Whether or not an individual has an account (yi) is the dependent variable.ii.Coefficients:β1=0.123β2=−0.133β3=−0.102iii.iindicates the household in which the data is collected from. For example, ifi=1,then it is household number 1. Ifi=2, then it is household number 2.b.yiis a dummy variable. Ifyi=0, they have no account. If it isyi=1, they havean account.c.X1represents information. IfX1=0, they are not given information. IfX1=1,they are given information.X2represents the non-educated. IfX2=0, they areeducated. IfX2=1, they are the non-educated.d.i.Givenii.yi=β0+β1+εi❑❑iii.yi=β0+β2+εi❑❑iv.yi=β0+β1+β2+β3+εi❑❑e.i.β1ii.β1=0.123iii.Holding all else constant, there is a 12.3 percentage point increase in theprobability of adopting a formal savings account when given the informationtreatment.

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Term
Fall
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Tags
Statistical hypothesis testing, Statistical significance, Household income in the United States, empirical analysis