Question

Consider predicting annual salary from age, experience, and an interaction term.
a. Create a new variable, “interaction,” by multiplying age by experience for each employee.
b. Find the regression equation to predict annual salary from age, experience, and interaction.
c. Test whether you have a significant interaction by using a t test for the regression coefficient of the interaction variable.
d. What is the average effect on annual salary of an extra year’s experience for a 40-year-old employee?
e. What is the average effect on annual salary of an extra year’s experience for a 50-year-old employee?
f. Interpret the interaction between age and experience by comparing your answers to parts d and e of this exercise.


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  • CreatedNovember 11, 2015
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