Formulate hypotheses for both wealth variables and justify them. Please introduce the research…

A team of researchers sets out on an ambitious project. They want to test the e?ects of absolute

and relative wealth on well-being (life satisfaction/happiness). To do so, they randomly sample 1000

sub-national regions out of all regions in the world. For each region, they measure satisfaction with life

(well-being) on a 0-100 scale where 100 is the happiest. To capture absolute wealth, they collect data

on GDP/capita in each region in 1000 US dollars. Relative wealth is measured using the Gini-index. It

ranges from 0-100, where 100 implies that all wealth is in the hands of one person and 0 implies perfect

equality. You can download the dataset “econdata.csv” on QMplus.

Life Satisfaction 0-100 (100 = most happy, 0 = least happy, 50 = neither happy nor unhappy )

Gini Goecient 0-100 (100 = 1 person owns everything, 0 – everyone owns the same)

GDP/captia in 1000 US dollars


1. Formulate hypotheses for both wealth variables and justify them. Please introduce the research

question to the reader.

2. Regress life satisfaction on the Gini coecient and GDP captia (live satisfaction is the dependent

variable) and present your results in a publican-style regression table. Also run two bivariate

models for each of your independent variables.

3. Compare you multiple regression model to the results from bivariate models. Discuss model fit.

4. Interpret your multiple regression model in statistical and in substantive terms.

5. Construct confidence intervals around the estimates of the coecient for the Gini Goecient and

the coecient for GDP/captia and interpret them.

6. Bonus: Re-examine the scatter plots, and address non-linearities. Please try running a fourth

model using the tools you have learned to address non-linearity


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