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What is examined in the simpler model

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Reference no: EM132015120

Consider the two regression models:

Pizza=β1+β2Income+β3Age+β4(Age×Income)+u

(1)

Pizza=β1+β2Income+β3Age+u

(2)

where    Pizza   = Individual's annual expenditure on pizza

Income   = Individual's annual income

Age     = Individual's age in years

Suppose that the estimated coefficients b1, b2, and b3  are all positive in both Model (1) and (2) and b4  is also positive in Model (1).

By including the interaction term (Age×Income) in Model (1), what can be examined about the relationship between Pizza and Income and Age beyond what is examined in the simpler Model (2)?

Reference no: EM132015120

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