Question

Suppose you are interested in estimating how health affects productivity. Specifically, you are interested in the following regression:

2)

where Yi is a variable representing the income earned by person i, and Xi is a variable representing the health of person i.

Income is a fairly straightforward concept to capture. Health, however, is a more complex concept that can be measured in many different ways. For example, body mass index (BMI - weight in kilograms, divided by height in meters squared) is one indicator of health. People with very low BMI are considered underweight (which is typically not healthy) and people with very high BMI are considered overweight (which is typically not healthy).

Answer 1

7. The difference exists mainly because of the vast differences in per capita income. In the US every person can afford a full meal at least twice a day, even if the person is not earning due to social security program. In India, the probability that a person can afford two full meals daily is lesser as compared to the US also in case of unemployment there is no social security scheme. Obesity is faced by the US. Malnutrition is faced by Indians.

8. A healthy mind and body help to increase the productivity of labor. Endogeneity means that there are many more elements that affect the income variable apart from health