Ask Question, Ask an Expert


Ask Statistics and Probability Expert

1. Using the dataset WAGE1.dta…

a) Regress wages on education and experience but do so in a way that produces standardized betas. That is, you will have to take each variable and standardize it by subtracting from it the mean and dividing by the standard deviation, i.e.x_standard= (x-x_bar)/x_std.

b) Interpretation the coefficients on education and experience?

c) Now regress log wage (already defined as “lwage” in the dataset) on education, experience, non white, female, married. Now run the same regression but including a variable that is the interaction between female and education. Interpret the coefficient on the interaction term. describe what happens to the standard error of the main education effect and why. Would you recommend keeping this interaction term in the equation? Why or why not?

d) Now drop the female X education interaction, but add another interaction, between female and married. What is the effect of being married for men? Now report the coefficient and standard error of the marriage effect for women. Is it statistically different from zero? (hint: for the standard error of a linear combination of estimates, use “lincom”):

e) Manually find out the adjusted R-squared for the regression in (d). Note: take advantage of the Stata output. Type “help regress” and scroll to the bottom. There you will see that the model sum of squares (i.e. the Sum of Squares describeed SSE) can be referenced as e(mss).

However, you can only access these results right after the regression has been run and before performing any other calculations. So, run the regression in (e) again, though you can do so without printing the results to the screen using the syntax “quietly: regress y x”. Confirm that your R-squared is the same as the one produced by Stata.

f) Building on the regression in (d), add the occupation variables: profocc, clerocc, servocc. What happens to the estimated rate of return to education? Why does this happen? If our goal is to correctly identify the causal effect of education, would you recommend including or excluding these occupation variables? describe why.

g) Manually find out the adjusted R-squared for the model you just ran? Compare with the result in (e). From an adjusted R-squared perspective, did the extra variables (profocc, clerocc, servocc) add much explanatory power to the model?

2. The dataset KIELMC.dta has information about houses sold in 1978 and 1981 in a Massachusetts town. In 1981 an incinerator was built.

a) Regress the log of the house’s sale price against the log of distance from the incinerator for houses sold in 1978 only. Run the same regression for houses sold in 1981 only. (Hint: use the clause “if year==1978” to select just that year for the regression). Does the result for 1978 make sense, given that the incinerator wasn’t built yet? What could describe this result?

b) Add the following variables to the regression: log of square footage of lot (lland), log of square footage of house (larea), log of distance to interstate (linst), age of house, squared age of house, number of rooms, number of bathrooms. Run the regression again for 1978, and again for 1981. What are the estimated effects of distance from the incinerator in 1978 and 1981 now? Are they significant and do they make sense?

describe why these results are so different from the ones in a.

c) For the regression from part b), perform a Chow Test to determine whether the 1978 and the 1981 data have the same parameters. Given the results from b) what do you expect the outcome of this test to be? (Hint: quietly run a pooled regression, a 1978 regression, and a 1981 regression, saving the SSR each time. Remember that the sum of squared residuals (aka residual sum of squares) can be accessed after the regression by typing “scalar ssr = e(rss)”).

d) Again using the regression from b), for the data, at what age does a house reach its maximum or minimum value? Which is it, a max or a min, and how do you know? Does that make sense? Are there any houses older than this in the data?

e) Rerun the 1981 equation but including the squared log of the distance to the interstate. What happens to the coefficient on distance to the incinerator? What does this tell you about the importance of functional form?

3) This exercise uses the dataset GPA1.dta.

a) Run a regression of colGPA against all of the following: hsGPA, ACT, PC, skipped, alcohol, greek, bgfriend

b) Now run the “restricted” regression that you need to construct an F-test of the joint hypothesis that the three “social” variables (alcohol, greek, and bgfriend) do not matter. Construct that F-statistic. Are these social variables jointly significant at alpha=1%?

describe how you know.

c) Confirm that you can get a similar result using Stata’s test command, which performs a Wald test, which is very similar to the F-test you just ran. The syntax is test varlist.

d) Now run a Linear Probability Model where bgfriend is the dependent variable and alcohol, greek, and colGPA are the independent variables. What is the interpretation of the coefficient on on alcohol?

e) A critique of the LPM is that the predicated values might value outside the 0-1 range. (probabilities can only range from 0 to 1). find out the predict values from (d). What percent of the predicted values are outside the 0-1 range? (Hint: an easy way to do this is to generate an 0/1 variable where 1 indicates that yhat was out of the 0-1 range. Then simply take the mean of the 0/1 variable).

f) We know that the Linear Probability Model suffers from heteroskedasticity. Test for heteroskedasticity using the special case of the White Test. Do you reject the null hypothesis of homoscedasticity at the 5% level, at the 10% level? (Hint: use the version of the F-stata for testing the overall significance of a regression).

g) Re-run the LPM but this time telling Stata to find out robust standard errors, i.e. specifying the vce(robust) option when running the regression. How do these standard errors compare to those in (d)? How about the coefficient estimates?

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M93542

Have any Question? 

Related Questions in Statistics and Probability

30000 people participated in an online poll on cnncom

30,000 people participated in an online poll on conducted in April 2012 asking "Have you ever driven with a pet on your lap?" 34% of the participants answered yes and 66% answered no. (a) Can we conclude that 34% ...

Peter has two envelopes he puts 10k euros in one and 10k1

Peter has two envelopes. He puts 10k euros in one and 10 k+1 euros in the other, where k is the outcome of the toss of a fair die. Peter gives one of the envelopes to Mark and one to Luke (neither Mark nor Luke knows the ...

Its believed that as many as 20 of adults over 50 never

It's believed that as many as 20% of adults over 50 never graduated from high school. We wish to see if this percentage is the same among the 25 to 30 age group. a) How many of this younger age group must we survey in or ...

Relate the content of this video to the industry segment of

Relate the content of this video to the Industry segment of the external environment by describing which of Porter's Five Competitive Forces is the focus of Outsell Consulting's value proposition? What is the nature of t ...

Develop a research question that addresses one of the

Develop a research question that addresses one of the unknowns in the question: Positive interactions between the CEO and board members lead to enhanced and better performance of the Corporation . Address the following 1 ...

What were the causes of the cold war also describe the

What were the causes of the Cold War? Also, describe the steps that the USA took to meet the perceived Soviet threat during the 1940s, '50s and '60s. Be sure to include the following topics: Iran crisis of 1946 Iron Curt ...

Considering the effect that colonialism has had on the

Considering the effect that colonialism has had on the world today, how has and/or does Colonialism continue to affect the world? Choose one country or area that we have studied and discuss the continuing effects of colo ...

In a recent survey of high school seniors a random sample

In a recent survey of high school seniors, a random sample of 1000 females showed that 650 were planning on pursuing a college degree, while a random sample of 1000 females showed that 600 were planning on pursuing a col ...

This course is designed to provide you with the knowledge

This course is designed to provide you with the knowledge and skills in application, evaluation, analysis, and interpretation of biostatistical data used to inform public health programs, policy, and practice. View the o ...

1 what are the most important threats to validity that

1. What are the most important threats to validity that occur in quasi experimental research designs when the research is conducted over a period of time? What techniques can be used to minimize these potential interpret ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro