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Social ScienceIn which of the following cases OLS estimation of Healthcare=a+bAge+u will be biased?a) Only include in your estimation sample individuals whose health care spending is more than 500 per year.b) Use a random sample.c) Healthcare is recorded with some random typing errors.d) The error variance is larger at an older age.
In which of the following cases OLS estimation of Healthcare=a+bAge+u will be biased?
a) Only include in your estimation sample individuals whose health care spending is more than 500 per year.
b) Use a random sample.
c) Healthcare is recorded with some random typing errors.
d) The error variance is larger at an older age.
Expert Answer
To identify the case in which the OLS estimation of Healthcare=a+bAge+u will be biased
OLS method is used to find the unknown parameters in the linear regression model. In the Ordinary Least Square (OLS) method, the focus is on finding a model that fits closely to the whole population and not restrict itself to some particular...
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