In examining the determinants of income, data were collected regarding the characteristics of 45 adults, and the regression Y = β 0 + β 1 X 1 + β 2 X 2 + β 3 X 3 +ε was used, where Y is the annual income (in thousands of dollars), X 1 is the person's age, X 2 is his/her years of education, and X 3 is a dummy variable = 1 if the adult is female.
If you get = 26.3 + 1.38 x 1 + 2.98 x 2 - 0.76 x 3 + 0.34( x 2 ∙ x 3 ) when you run the regression, how would you interpret the coefficient on his/her years of education?

Question

In examining the determinants of income, data were collected regarding the characteristics of 45 adults, and the regression  Y  =  β 0   +  β 1 X 1   +  β 2 X 2   +  β 3 X 3   +ε was used, where  Y  is the annual income (in thousands of dollars),  X 1   is the person's age,  X 2   is his/her years of education, and  X 3   is a dummy variable = 1 if the adult is female. 
    If you get     = 26.3 + 1.38 x 1   + 2.98 x 2   - 0.76 x 3   + 0.34( x 2   ∙  x 3 ) when you run the regression, how would you interpret the coefficient on his/her years of education?

Answer

For each additional year of education, women approximately earn $340 less than men.

Answer

For each additional year of education, women approximately earn $1,100 less than men.

Answer

For each additional year of education, women on average earn $420 less than men.

Answer

For each additional year of education, women on average earn an additional $3,320.

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In examining the determinants of income, data were collected regarding the chara...

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