Assignment 1: First Regression
(a) Describe the economic issue.
In order to explain an individual's consumption patterns based on their stage in life and the resources available to them over their lifetime, Modigliani proposed the Life-Cycle Hypothesis (Modigliani 160-217; Japelli and Modigliani 7), which states that the savings ratio of an individual could be explained by per-capita disposable income (dpi), the percentage rate of change in per-capita disposable income, the percentage of population less than 15 years old and the percentage of the population over 75 years old.
(b) Describe the data
The LifeCycleSavings data included in R contains data on the savings Continue reading...