Choose best answer and briefly explain your reasoning 8. Suppose a researcher is

Question

Choose best answer and briefly explain your reasoning

8. Suppose a researcher is interested in estimating the habit formation for cigarette smoking and estimating following model using a random sample: cigarette, = + cigarette, u where cigarette, and cigarette are the average number of cigarettes smoked per week this year and last year, respectively. Which of the following is true regarding the OLS estimator B? a) Using weekly rather than daily number of cigarettes smoked will make ß larger. b) Using weekly rather than daily number of cigarettes smoked will make smaller.

Explanation / Answer

Option d

Since weekly data of no.of cigarettes smoked will make more sense and give smaller Beta hat and higher standard deviation for beta hat which will reduce t statistic

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