Econometrics

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Moderate

Savings Variance

EMETRC-1AX1BN

Suppose you estimate a regression of savings as a function of income using a random sample of the US population:

$$savings = \beta_{0} + \beta_{1} income + u$$

However, you are concerned because you think that those with a lower income have a lower variance in savings than those with a higher income. This is known as _______________.

A

Homoskedasticity

B

Heteroskedasticity

C

Bias

D

Inconsistency

E

Conditional Expectation