I am concerned that income is measured with error. That is, the variable income in population model [E1] is the true income, while in the sa there is measurement error such that the observed income, ObsIncome, incom where e, is the measurement error.

MATLAB: An Introduction with Applications
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Author:Amos Gilat
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I am concerned that income is measured with error.
That is, the variable income in population model [E1] is the true income, while in the survey data
there is measurement error such that the observed income, ObsIncome, = income, + e,.
where e, is the measurement error.
Assume income is measured with error of the classical errors in variables (CEV) form.
State the CEV assumption for this measurement error in income. You can state it as an equation
or in words.
If income is measured with error and the CEV assumption holds, what is the effect on our
estimator for B₁?
Transcribed Image Text:I am concerned that income is measured with error. That is, the variable income in population model [E1] is the true income, while in the survey data there is measurement error such that the observed income, ObsIncome, = income, + e,. where e, is the measurement error. Assume income is measured with error of the classical errors in variables (CEV) form. State the CEV assumption for this measurement error in income. You can state it as an equation or in words. If income is measured with error and the CEV assumption holds, what is the effect on our estimator for B₁?
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