In a regression explaining wages with the number of years of education (wage = β0 + β1educ+u), it is likely that people with more education have a wider variety of interests and job opportunities, which would lead to more wage variability at higher levels of education. People with very low levels of education have fewer opportunities and often must work at the minimum wage; this serves to reduce the wage variability at low education levels. What is the name of this problem in econometrics? How do we deal with it?

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

answera public company has access to more capital;