This formula says that we can predict educ from the parents’ education, from IQ, from experience and so on. After we do that, we’ll be left with a version of educ, which is uncorrelated with all the variables included previously. This will break down arguments such as “people that have more years of education have it because they have higher IQ. It is not the case that education leads to higher wages. It is just the case that it is correlated with IQ, which is what drives wages”.
In the sentence above think the variable we are predicting should be wage, Since educ is on the rhs
In the sentence above think the variable we are predicting should be
wage, Sinceeducis on the rhs