ECON2515 - Intermediate Applied Econometrics 

Assignment Task 

Task

A life insurance company wishes to examine the relationship between the amount of life insurance held by a family and family income. From a random sample of 20 households, the company collected the data in the file insured. The data are in units of thousands of dollars. In this question, you must use STATA wherever possible.

• Use STATA to provide summary statistics for each variable. 
• Create scatter plots and histograms of the variables. Ensure you have correctly labeled the axes, being careful of the choice of variable for each axis. 
• Estimate the linear regression model between INSURANCE and INCOME. Be careful in choosing your dependent variable and independent variable. 
• Write down the fitted regression model. 
• Using Stata, plot the sample regression function against the scatter plot of the data. 
• Estimate insurance at the 1st, 2nd, and 3rd quartiles of income. (Hint: use the summarize command with the detail option). 
• Write a separate short (1 page) report summarizing your results from parts (a) to (f) above. 

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