1. Choose a pair of variables that might have some relationship between them. Explain why the relationship might be interesting from an economist's point of view. 2. Briefly describe some recent literature (2010-) that explores the relationship between these variables. (Hint: use Google Scholar). 3. Obtain data on each variable for the same units of observation over the same time period. (You may use aggregate data on e.g. UK GDP; this may have the advantage of being more widely available). Some data sets on households and/or individuals available for public use include the British Household Panel Study (BHPS), Panel Study of Income Dynamics (PSID), and the National Longitudinal Survey of Youth (NLSY). 4. Run a simple linear regression of the outcome variable on your chosen explanatory variable and report the results. Test the null hypothesis that there is no relationship. 5. Discuss any unobserved factors that may lead to you observing a spurious relationship between the two variables you chose. Are you more likely to be over- or underestimating the true strength of the relationship ?

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1 Lets consider the relationship between education level and income This is interesting for economis... View the full answer