QUESTION 2 - ANSWER

What is the correlation between a family's income and savings?

Both total montly household savings, mxsav, and total monthly household income, totminc, are household-level variables. Since we do not want to allow larger households to overinfluence the results, let's again use only one observation per household.

sort hhid
corr mxsav totminc if hhid~=hhid[_n-1]

         |    mxsav  totminc
---------+------------------
   mxsav |   1.0000
 totminc |   0.1852   1.0000

From these results, we can conclude that there is a weak positive relationship between income and monthly savings. That is, households with higher the income are somewhat more likely to save than lower income households. However, we cannot determine how much money is actually saved without doing further analysis.

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