Consider the estimates below: Amount of coverage and household income - continuo

Question

Consider the estimates below:

Amount of coverage and household income - continuous variables

Retired (0 - No, 1 - Yes) and Marital Status (0 - Single; 1 - Married) - dichotomous varaibles

.410

a. Dependent Variable: Cost of claim

What demographics insurance company target in order to maximize profitability?

Married AND retired people

Single and retired people

Married people

Retired people

Model Unstandardized Coefficients Standardized Coefficients T Sig B Std error Beta Constant 2.980 3.618 .824

.410

Amt. of coverage .216 .007 .489 32.645 .000 Retired -8.073 5.664 -0.19 -1.425 .154 Househ. Inc. .086 .032 .040 2.659 .008 Marital sts. -1.157 3.741 -.004 -.309 .407

Explanation / Answer

if profitability is being regressed here, then they should avoid both married and retired because both of their coefficients are negative. But since marital status' coefficient is smaller (x can only vary between 0 and 1, so smaller coefficient is important), and p-value is large (this variable is insignificant), it is safe to target married people.

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