Managerial Economics Problem Set 3 Directions: Please follow the instructions on the syllabus indicating how to complete and turn in this assignment. 1. You have probably heard of the old saying “correlation isn’t causation.” What does this mean? Provide an example where two variables are highly correlated but there is unlikely to be any causal relationship. Finally, How does regression analysis try to address the issue that correlation isn’t causation? 2. Using the examples I described at the end of the econometrics – applied lecture, come up with a 1-2 page research proposal in which regression analysis would be appropriate. So, for example, I discussed the desire to understand why in some instances when a person is pulled over by the police they are issued a ticket whereas in other cases they are not. I described the question, and then wrote out a regression equation and discussed how the variables could be measured, and what results I might expect to find. I’d like you to do the same, but for your OWN, ORIGINAL research question. The best way to come up with the topic is to think about an observation of differences: students score differently on exams, some students graduate in 4 years, some do not, some students major in economics some do not. It can be any topic at all, it does not have to be about college life.
