Question: Please help me with solving question ( a ) Please explain everything that is requested Thanks a lot! '3'. The US spends twice as much

Please help me with solving question (a)

Please explain everything that is requested Thanks a lot!

Please help me with solving question (a)Please explain everything that is requested

'3'. The US spends twice as much as the average OECD country, 90% more than the Canada and 150% more than the UK. yet the US has one of the lowest life expectancy rates and one of the highest infant mortality rates in the developed world. Some have suggested these numbers indicate that at the margin, additional health care dollars generate little in the way of better health outcomes. An author is interested in examining whether greater health care spending produces better outcomes for newborns. The author focuses on newborns because childbirth is the most frequent reason for a hospital admission and the average hospital stay for childbirth costs about $6000. The author starts the analysis by considering a very simple question: are outcomes better for newborns that receive more care? The author takes a sample of newborns and regresses whether the child died within 28 days of birth (y=l if they dies, y=0 otherwise) on the hospital expenditures for the newborn right after their birth (1). This basic regression is dened as equation (I) 3'; = u + it}? +5.. and the model is estimated by OILS. a) Is the 013 estimate of ii. from the simple bivariate model above an unbiased estimate of the impact of health care spending on infant mortality? Why or why not? If the estimate is biased, provide an equation that illustrates whether the estimate is biased up or down

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