(Use TermLife.csv data file) Term Life Insurance: Here we examine the 2004 Survey of Consumer Finances (SCF), a nationally representative sample that contains extensive information on assets, liabilities, income, and demographic characteristics of those sampled (potential U.S. customers). We study a random sample of 500 families with positive incomes. From the sample of 500, we initially consider a subsample of n = 275 families that purchased term life insurance.

Note: For n = 275, we want you to subset the data so that you are only looking at rows where FACE > 0. Also, variable LNFACE = log of the face variable and LNINCOME = log of the income variable.

(a)Fit a linear regression model of LNINCOME, EDUCATION, NUMHH, MARSTAT, AGE, and GENDER on LNFACE.

(b)Check if multicollinearity is present.

(c)Briefly explain the idea of collinearity and a variance inflation factor. What constitutes a large variance inflation factor?

(d)Supplement the variance inflation factor statistics with a table of correlations of explanatory variables. Given these statistics, is collinearity an issue with this fitted model? Why or why not?