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Dealing with a large collection of categories complicates a regression, and software does not always provide the needed tools. The follow- ing procedure is often helpful. Rather than add State to the regression (as in the previous question), save the residuals from the model in Table 4. Then use a one-way analysis of variance (ANOVA) to discover whether the average residual in any pair of states is statistically significantly different.

(a) Does the F-statistic of the one-way ANOVA detect a statistically significant difference among the averages? Does the result differ from the partial obtained by adding State directly to the regression? Explain.

(b) Do any pairs of states have statistically signifi- cantly different means? With so many compari- sons, be sure to use an appropriate adjustment for multiple comparisons.

(c) How could you incorporate these differences into the regression model without adding the 50 coef- ficients needed to represent State?

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