A substantial interaction between age and educational status was discovered by a researcher who was creating a regression equation to predict income (y) in thousands of dollars from age (x1) and educational status (x2) (x3)
A dummy variable, educational status has the values 0 for no college degree and 1 for a college degree.
The regression formula is y = 0 + 1x1 + 2x2 + 3x1x2 where 0 is the intercept, 1 is the age regression coefficient, 2 is the educational status regression coefficient, and 3 is the regression coefficient for the interaction between age and educational status.
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