Let’s say that we estimate the following regression where colli is a dummy equal to 1 if individual i went to college and 0 otherwise and disti is the distance in miles for individual i to the nearest college when i grew up.

colli = ?0 + ?1disti + ?i

a) How do you interpret the predicted outcome of this regression, colli.

b) How do you interpret the estimated? 1?

c) Do you think 1 is most likely to be positive or negative? Given your hypothesized sign, describe some potential problems with this specification and suggest how these problems can be addressed.