Simple Linear Regression Problem

  • Thread starter Absolut
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  • #1
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Hi,

I've got what should be a very easy simple linear regression problem, but I can't seem to be able to get my head around it. Here it is:

In a wage regression (the Y variable is Wages, measured in dollars per hour), the slope coefficient on age is 5 and for age squared the coefficient is -0.003.
At what age foes the influence of age on wages turn from positive to negative?
So far I've been trying to sub these values into a regression equation like this one:
Y = 5B + (-0.003)B^2
Where "B" is my Beta1 value. I differentiate this then set it equal to zero to find a max value - this comes out to be 833.333, which is a non-sensical value (intuitively, I think the value should be approx 50, but definetly no where near 833). I can't see what I'm doing wrong and my notes on this aren't very good, so any help you can give me is much appreciated.

Thanks in advance for any help you can give me.
 

Answers and Replies

  • #2
ssd
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What you have done appears to be correct. Please check the question again.
 
  • #3
D H
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Intuitively, I think the value should be approx 50, but definetly no where near 833.
Why would you think that? Old farts don't get pay cuts. They get canned or puny little pay raises that fail to meet the inflation rate. If they are canned, they have no wage, so I would assume that they are out of the picture. If they get a pay raise that is below the increase in the cost of living, its still a pay raise.
 

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