The following simple model is used to determine the annual savings of an individual on the basis of his annual income and education. Savings = BotdgEdu + Blnc+u The varlable "Edu takes a value of 1if the person is educated and the variable Inc" measures the income of the individual. Refer to the above model. If d 0, uneducated people have higher savings than those who are educated. b. educated people have higher savings than those who are not educated. ndividuals with lower income have higher savirngs d. Individual with lower income have higher savings
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
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