C3.

1
(i)
(ii)

Positive
Yes.
Positive: High income, can buy more goods
Negative: base on fatheduc, most family have high education and know the danger of smoking, so high
income family with high education tend not to smoke
CIGS
1.000000
-0.173045

CIGS
FAMINC

(iii)

FAMINC
-0.173045
1.000000

cigs
Dependent Variable: BWGHT
Method: Least Squares
Date: 12/20/14 Time: 16:35
Sample: 1 1388
Included observations: 1388
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
CIGS

119.7719
-0.513772

0.572341
0.090491

209.2668
-5.677609

0.0000
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.022729
0.022024
20.12858
561551.3
-6135.457
32.23524
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

118.6996
20.35396
8.843598
8.851142
8.846420
1.924390

faminc
Dependent Variable: BWGHT
Method: Least Squares
Date: 12/20/14 Time: 16:37
Sample: 1 1388
Included observations: 1388
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
CIGS
FAMINC

116.9741
-0.463408
0.092765

1.048984
0.091577
0.029188

111.5118
-5.060315
3.178195

0.0000
0.0000
0.0015

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

C3.2

0.029805
0.028404
20.06282
557485.5
-6130.414
21.27392
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

118.6996
20.35396
8.837772
8.849089
8.842005
1.921690

(i)

result: price = -19,315 + 0,128 sqrft + 15,198 bdrms

Dependent Variable: PRICE
Method: Least Squares
Date: 12/20/14 Time: 16:50
Sample: 1 88
Included observations: 88
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
SQRFT
BDRMS

-19.31500
0.128436
15.19819

31.04662
0.013824
9.483517

-0.622129
9.290506
1.602590

0.5355
0.0000
0.1127

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)
(ii)
(iii)
(iv)
(v)
(vi)

C3.3

0.631918
0.623258
63.04484
337845.4
-487.9989
72.96353
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

$15.198,19

$ 33,17923
R2= 63%
354.600
Estimate price = 354.600
Since actual =300.000
Then
=300.000-354.600=-54.600 (underpaid)

293.5460
102.7134
11.15907
11.24352
11.19309
1.858074

(i)

Log (salary) = B0 + B1 log (sales) + B3 log (mktval)

Log (salary) = 4,621 + 0,162 log (sales) + 0,107 log (mktval)
Dependent Variable: LSALARY
Method: Least Squares
Date: 12/20/14 Time: 19:38
Sample: 1 177
Included observations: 177
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
LSALES
LMKTVAL

4.620918
0.162128
0.106708

0.254408
0.039670
0.050124

18.16339
4.086899
2.128880

0.0000
0.0001
0.0347

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)
(ii)

0.299114
0.291057
0.510294
45.30966
-130.5594
37.12852
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

6.582848
0.606059
1.509146
1.562979
1.530979
2.092115

Log (salary) = B0 + B1 log (sales) + B3 log (mktval) + B3 profits

Log (salary) = 4,687 + 0,161 log (sales) + 0,097 log (mktval) + 3,57*10-5 profits
Dependent Variable: LSALARY
Method: Least Squares
Date: 12/20/14 Time: 19:42
Sample: 1 177
Included observations: 177
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
LSALES
LMKTVAL
PROFITS

4.686924
0.161368
0.097529
3.57E-05

0.379729
0.039910
0.063689
0.000152

12.34280
4.043299
1.531333
0.234668

0.0000
0.0001
0.1275
0.8147

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.299337
0.287186
0.511686
45.29524
-130.5312
24.63628
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

6.582848
0.606059
1.520127
1.591904
1.549237
2.096546

The R2 is almost the same, including variable profits only gives small influence to the model.
70% of variation in log salary is unexplained.
(iii)

Log (salary) = B0 + B1 log (sales) + B3 log (mktval) + B3 profits + B4 ceoten

Log (salary) = 4,558 + 0,162 log (sales) + 0,102 log (mktval) + 2,91*10-5 profits + 0,012 ceoten

Dependent Variable: LSALARY

Method: Least Squares
Date: 12/20/14 Time: 19:49
Sample: 1 177
Included observations: 177

C3.4
(i)

Descriptive stat
ATNDRTE
81.70956
87.50000
100.0000
6.250000
17.04699
-1.578799
5.693665

PRIGPA
2.586775
2.560000
3.930000
0.857000
0.544714
0.161246
2.760582

ACT
22.51029
22.00000
32.00000
13.00000
3.490768
0.075404
2.645701

Jarque-Bera
Probability

488.0774
0.000000

4.570791
0.101734

4.200994
0.122396

Sum
Sum Sq. Dev.

55562.50
197317.3

1759.007
201.4684

15307.00
8273.928

680

680

Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis

(ii)

Observations
680
Estimate the model
Atndrte = 75,70 + 17,261 prigpa 1,717 act

The intercept of 75.70 is the predicted percent of classes attended for a student with 0
cumulative GPA prior to the current term and an ACT score of 0. I would not call this particular
meaning useful. The intercept is useful, but its interpretation is not.
Dependent Variable: ATNDRTE
Method: Least Squares
Date: 12/20/14 Time: 20:09
Sample: 1 680
Included observations: 680
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
PRIGPA
ACT

75.70041
17.26059
-1.716553

3.884108
1.083103
0.169012

19.48978
15.93624
-10.15640

0.0000
0.0000
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)
(iii)

(iv)

(v)

C3.5

0.290581
0.288486
14.37936
139980.6
-2776.115
138.6513
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

81.70956
17.04699
8.173867
8.193817
8.181589
2.010991

Additional point for GPA will increase the class attendance. However, additional score for ACT
test will decrease the class attendance. Unexpected result. Perhaps gaining high score means
that student thinks they do not have the necessity to attend the class

104,36
would seem to be a very good student. But no student attends more than 100% of classes!
(observation number 569). The model provides residual
The difference in predicted attendance between Student A and Student B is 93.09 - 67.23=
25.86%

log(wage) =0.284+ 0.092 educ + 0.0041 exper + 0.022 tenure.

Dependent Variable: LWAGE
Method: Least Squares
Date: 12/20/14 Time: 20:35
Sample: 1 526
Included observations: 526
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
EDUC
EXPER
TENURE

0.284360
0.092029
0.004121
0.022067

0.104190
0.007330
0.001723
0.003094

2.729230
12.55525
2.391437
7.133071

0.0066
0.0000
0.0171
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.316013
0.312082
0.440862
101.4556
-313.5478
80.39092
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

1.623268
0.531538
1.207406
1.239842
1.220106
1.768805

Partialling out on educ coefficient

What we are doing is trying to find the effect of educ on log(wage), controlling for exper and tenure
This effect is equal to the effect on log(wage) of the portion of educ that is NOT explained by exper and
tenure. First we need to construct a variable that is equal to the portion of educ that is not explained by exper
and tenure. The easiest way to do that is to take the residual from the regression:
Educ = g0 + g1 exper + g2 tenure + u
Educ = 13,574 0,074 exper + 0,048 tenure
Dependent Variable: EDUC
Method: Least Squares
Date: 12/20/14 Time: 20:41
Sample: 1 526
Included observations: 526
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
EXPER
TENURE

13.57496
-0.073785
0.047680

0.184324
0.009761
0.018337

73.64710
-7.559282
2.600162

0.0000
0.0000
0.0096

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.101342
0.097906
2.629980
3617.483
-1253.487
29.48955
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

To find the residuals in this regression I subtract educ from educ:

Dependent Variable: LWAGE

12.56274
2.769022
4.777517
4.801843
4.787042
1.869826

C3.6
(i)
EDUC

3.533829

0.192210

18.38530

0.0000

EDUC

0.059839

0.005963

10.03492

0.0000

EDUC
IQ

0.039120
0.005863

0.006838
0.000998

5.720784
5.875413

0.0000
0.0000

(ii)

(iii)

(iv)

C3.7

(i)
Dependent Variable: MATH10
Method: Least Squares
Date: 12/20/14 Time: 21:16
Sample: 1 408
Included observations: 408
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
LEXPEND
LNCHPRG

-20.36076
6.229691
-0.304585

25.07287
2.972634
0.035357

-0.812063
2.095680
-8.614468

0.4172
0.0367
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.179927
0.175877
9.526228
36753.36
-1497.073
44.42926
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

24.10686
10.49361
7.353301
7.382795
7.364972
1.902822

math10 = -20,36 + 6,23 lexpend 0,305 lnchprg

The sign of the coefficients are as expected: the percentage of students passing a math
exam is increasing in expenditure per student and decreasing in the percentage of students
who are in a school lunch program (presumably a subsidized lunch program)
(ii)
(iii)

No. for lexpend cannot set to 0 because log 0 = undefined. At least $1 for lexpend. For lnchprg
we can set it to 0
Math10 with lexpend

Dependent Variable: MATH10

Method: Least Squares
Date: 12/20/14 Time: 21:27
Sample: 1 408
Included observations: 408
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
LEXPEND

-69.34108
11.16439

26.53013
3.169011

-2.613673
3.522990

0.0093
0.0005

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.029663
0.027273
10.34953
43487.76
-1531.396
12.41146
0.000475

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

24.10686
10.49361
7.516649
7.536312
7.524429
1.614623

The magnitude of the slope coefficient has gotten larger. It was previously 6.23 and is now
11.16. This speaks to a negative correlation between log(expend) and lnchprg.
(iv)

correlation between lexpend log(expend) and lnchprg

LEXPEND
LNCHPRG

LEXPEND
1.000000
-0.192704

LNCHPRG
-0.192704
1.000000

student spends more for lexpend than lnchprg. Negative correlation

(v)

C3.8

the inclusion of lnchprg suppressed the coefficient on log(expend)

(1) when lnchprg increases, math10 decreases; (2) when lexpend increases, lnchprg
decreases. Therefore, when lexpend increases, what happens, in total? When lexpend
increases, lnchprg decreases, which causes math10 to go . . . up.

(i)

descriptive stat
PRPBLCK
0.113486
0.041444
0.981658
0.000000
0.182416
2.700012
10.56841

INCOME
47053.78
46272.00
136529.0
15919.00
13179.29
0.962831
7.551386

Jarque-Bera
Probability

1473.100
0.000000

416.2135
0.000000

Sum
Sum Sq. Dev.

46.41594
13.57651

19244998
7.09E+10

Observations

409

409

Mean
Median
Maximum
Minimum
Std. Dev.
Skewness
Kurtosis

prpblck = percentage
income = dollar
(ii)
Psoda = 0,956 + 0,115 prpblck + 1,6*10-6

Dependent Variable: PSODA

Method: Least Squares
Date: 12/20/14 Time: 21:39
Sample: 1 410
Included observations: 401
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
PRPBLCK
INCOME

0.956320
0.114988
1.60E-06

0.018992
0.026001
3.62E-07

50.35379
4.422515
4.430130

0.0000
0.0000
0.0000

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.064220
0.059518
0.086115
2.951465
415.7934
13.65691
0.000002

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

1.044863
0.088798
-2.058820
-2.028940
-2.046988
1.696180

The coefficient on prpblck is 0.1149882. The literal interpretation would be: when prpblck
increases by 1, the price of a medium soda increases by 11 cents. The only problem is, the
notion of increasing prpblck by 1 is not very meaningful. prpblck is the proportion of individuals
in a zip code who are black cannot increase by 1 unless the proportion of individuals in a zip
code starts out as 0. That is, the only zip code that can increase by 1 is a zip code that starts
out with no individuals who are black, and then becomes a zip code that is made up only of
individuals who are black. This is not a very useful marginal effect. In order to interpret the
marginal effect more usefully, look at smaller (more realistically-sized) changes. For instance,
an increase of 0.01 (an increase of 1 in the percentage of individuals who are black in a zip
code) is predicted to increase the price of a medium soda by 0.1149882 0.01 = 0.00114988,

C4.1
(i)
(ii)
(iii)

As expenditure of candidate A increases for 1%, percentage of vote for candidate A will
increase for B1/100
H0: B1=-B2 or H0: B1+B2=0
1% increases expendA and 1% increases expendB leaves voteA unchanged
Estimate model
voteA = 45,079 + 6,083 lexpendA 6,615 lexpendB + 0,152 prtystrA

Dependent Variable: VOTEA

Method: Least Squares
Date: 12/21/14 Time: 16:52
Sample: 1 173
Included observations: 173
Variable

Coefficient

Std. Error

t-Statistic

Prob.

C
LEXPENDA
LEXPENDB
PRTYSTRA

45.07893
6.083316
-6.615417
0.151957

3.926305
0.382150
0.378820
0.062018

11.48126
15.91866
-17.46321
2.450210

0.0000
0.0000
0.0000
0.0153

R-squared
Adjusted R-squared
S.E. of regression
Sum squared resid
Log likelihood
F-statistic
Prob(F-statistic)

0.792557
0.788874
7.712335
10052.14
-596.8609
215.2266
0.000000

Mean dependent var

S.D. dependent var
Akaike info criterion
Schwarz criterion
Hannan-Quinn criter.
Durbin-Watson stat

50.50289
16.78476
6.946369
7.019277
6.975948
1.604129

Yes, 1% increases on expend A will probably increase vote for A. 1% increases on expend B
will decrease vote for A.
(iv)

t-test
tB1-B2=(6,083-(-6,615)) / (0,382-0,379)