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Economics

3. A researcher has estimated the likelihood of divorce: D = Bo + Â1CAT? + B2EDU; + B3KID; + BAMAR+ BAGE; where D;= dummy equal 1 if person ? files for divorce CATi = dummy equal 1 if person i is Catholic EDUi = years of education for person i KID; = number of kids person i has MARi = number of years person i has been married to a current spouse AGE; = person i age
d. Propose (any) one change to the model that you think would improve the model. Explain how this change would improve the model. (3)

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One possible way to improve the model would be to include the squared values of both number of years married, and the age of the person. It is very likely that the probability of filing a divorce is higher till a particular number of years of marriage or till a particular age, after which the likelihood of becomes much slower. The inclusion of squared terms will show the rate at which the probability of getting divorced changes with age or years of marriage.  

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