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The following equation explains weekly hours of television v

The following equation explains weekly hours of television viewing by a child in terms of the child’ … Show more The following equation explains weekly hours of television viewing by a child in terms of the child’s age, mother’s education, father’s education, and number of siblings: tvhours* = b0 + b1age + b2age^2 + b3motheduc + b4fatheduc + b5sibs + u. We are worried that tvhours* is measured with error in our survey. Let tvhours denote the reported hours of television viewing per week. (i) What do the classical errors-in-variables (CEV) assumptions require in this application? (ii) Do you think the CEV assumptions are likely to hold? Explain. ***we were given the hint: For the CEV assumptions to hold, the following condition must hold. Cov(x,e) = 0. I.e. We must be able to write tvhours = tvhours* + e0, where the measurement error e0 is uncorrelated with tvhours* and each explanatory variable in the equation. So, people who don’t watch tv probably get tvhours = 0 right. But do you think that people with high levels of education or age, systematically underestimate or overestimate their reporting of tv hours? • Show less


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